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SodaStream International Ltd. Message Board

  • amdtripledigits amdtripledigits Jul 25, 2014 11:01 AM Flag

    RESPONSE to another FOOLISH write up, by yet another clueless FOOL!

    Response to article by Alex Dumoritier:

    This is a terribly niave analysis of how private equity functions these days, and specifics of SODA's business.

    1) SODA has such a tiny market cap, such that PE firms do not need to use much debt to afford to finance a buyout.

    2) SODA has spent very agressively to grow revenues. Specifically SODA spent 50% of revs on SGA versus a signficantly lower amount at Keurig Green Mountain, which has a very similar business model.

    3) If you bothered to fully read the analysis from Whitney Tilson, you would realize how easy it is to adjust the spending at SODA, so that less money is spent on marketing, with the savings used to pay the interest on borrowings.

    4) SODA management admitted that they "wasted" a huge amount on Superbowls ads. SODA spent $50 million on marketing. SODA could almost completely cut that marketing budget. Most people say that they learn about SODA from friends and family!!!

    5) Even if the sales of systems slows down, almost every single system sale increases consumable sales. SODA had a huge surge in sales in 2012 and 2013.

    6) Consumables sales are continuing to increase at double digit rates! Even though system sales were down year over year!

    At a razor/blade business model company, the story is all about consumables!

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