The release I read said that it would be fiscal 2001 when "margins" normalized. I thought this was to be fixed by now. Why would it take so long to correct the problem? Given the current stock value you'd think there might be a greater sense of urgency to get it righted. I know FLO and KBL have great manufacturing strengths in baking. Is pie-making markedly different and maybe they're not as adept in that arena? Or is the problem much more than just production? I cannot imagine a pie production problem that would take 18 months to fix. Hell, Boeing fixed one of their production lines in a shorter time and they make something with 2 million parts.
To be honest, your post prompted me to re-read the press releases. Much to my chagrin, FLO did say 2001 before margins normalize (You want to see a rant regarding Mrs. Smiths, see my post 1325). I suspect not everybody caught this in the AM, or perhaps assumed it was a typo. Makes one wonder if that's not the reason for FLO's late afternoon sell-off.
On a positive note, my re-read of the release made me feel better about the Bakery prospects for this year. Some pretty bold statements there, especially the declaration that we'd see record Cash Flows this year from the Bakery division (safe dividend).
As to your specific criticism of the time it is taking to fix the pie equipment, I suspect that after over-promising and under-delivering through two quarters, management is setting us up for a positive surprise in 2000 for the pie business.
I've been keeping a close eye on the few comments from management over the months and have come to this conclusion as well: Management is most definitely setting the stage for upside surprises by doing what Microsoft has done for years. The latter half of this year is looking to be very rewarding once the blast freezer is old news and the conveyor work has been completed. Remember that the final packaging equipment is being uncrated and brought online at this time. Once all of this is accomplished, we should have clear sailing!!
Cash flow won't be a problem; therefore, the dividend can continue to be nominally increased in subsequent quarters.
One of the biggest surprises looking out just 12 months will be the earnings reported in February, 2001; I believe management is setting the stage for steady upside surprises as we approach the all-important Xmas season.