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Diamond Foods, Inc. (DMND) Message Board

follansdave 20 posts  |  Last Activity: 5 hours ago Member since: Jan 29, 2008
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  • Reply to

    Culture

    by rmtm71 Apr 24, 2015 12:08 PM
    follansdave follansdave 5 hours ago Flag

    Doc:
    That's 11 billion in sales. The earnings impact is relatively small - not proportional to the sales loss. I for one will not miss the stuff they are selling.
    What you will get over time is a larger share of the results of Tide, Pampers, Crest, and others. PG continues to pay a 3% dividend yield and also buy back shares - increasing the stake of shareholders who retain the stock.

  • Reply to

    Culture

    by rmtm71 Apr 24, 2015 12:08 PM
    follansdave follansdave Apr 24, 2015 3:17 PM Flag

    Those kinds of split ups generally work best when the segments would trade at dramatically different multiples of earnings.GE is a good example of that - the whole company has been trading at a low multiple as investors have considered it to be a financial institution - selling off the "banking" assets should enable the remaining industrial business to trade at a higher multiple. In PG's case, I personally don't see any benefit of splitting up the segments and perhaps some downsides. PG has already divested the food/beverage segment, pharmaceuticals, pet food, and now is apparently selling the "fashion" beauty brands like Wella, Cover Girl?, and Fine Fragrances. The rest is fairly homogeneous imo. In fact, some shareholders feel they would have better off retaining food and beverage

  • Reply to

    Culture

    by rmtm71 Apr 24, 2015 12:08 PM
    follansdave follansdave Apr 24, 2015 1:01 PM Flag

    I think the PG culture has changed over the past 30 plus years - but not for the reasons you suggest. It has been said that organizations don't change until they hurt and then the speed and degree of change is proportional to how much they are hurting. In PG's case, they were historically blessed by a stable core business and an R&D capability which created a stream of innovations unmatched by their competitors. That began to change in the 1980's and continued to decay until now. International expansion masked the problem for a while but it was still there and became even more apparent over the last decade or so.
    Making major acquisitions in consumer products is a sucker's bet imo - the sellers typically do much better than the acquirer. Hence the need to unload a lot of the stuff acquired in the hopes of generating new growth.
    It all comes down to being able to create superior products which support premium pricing and margins. Where that product superiority has decayed, one must reduce costs and become more price competitive. That in itself has changed the culture. PG simply can no longer afford the luxury of cost inefficiency and excessive overhead - which they have carried for years. While one may look back wistfully on the good old days and culture of old at PG, those days are gone and it is simply a matter of whether the company can emerge leaner, more focused, and able to produce some genuine innovation as they did in the past.

  • Reply to

    comparisons

    by docleaf02 Apr 23, 2015 12:42 PM
    follansdave follansdave Apr 23, 2015 3:32 PM Flag

    Doc:
    Based on what I see today, I think I am finally starting to get a glimpse of their plan. It looks like a pretty substantial departure from where they have been historically and is not likely to be very pretty in the near term.
    I think the brand divestiture plans make sense in themselves but would not be sufficient to turn the place around. So, I expect you will see a "leaner and meaner" company coming along with those. That will likely (opinion only - but based on some data) include some things that will not be popular - more enrollment reductions, some plant and office consolidations, some production shifted to lower cost locations, etc. In my view, they simply must be more competitive on costs and pricing and I think that's where they are headed imo. I have little doubt that they can execute such plans. I have some doubt whether it will work to restore growth but it's worth a shot. It will improve competitiveness and profitability whether it generates much growth or not.

  • Reply to

    Dividend

    by pmcgd4 Apr 17, 2015 4:48 PM
    follansdave follansdave Apr 18, 2015 9:32 AM Flag

    Chicken - This board, like some others, seems filled with folks who only want to #$%$ about the management. There is unfortunately little substantive discussion here. I agree with your POV - I hold some stock and collect the dividend since it is healthy and stable. Price appreciation has obviously been poor in recent years as the company struggles big-time to grow from such a large base in a mature business. For that reason, I have sold more than half of my position versus several years ago and moved the funds to better growth opportunities. If one is expecting PG to grow rapidly, I think he/she is likely to continue to be disappointed no matter who manages the place.

  • Reply to

    No floor for this stock?

    by docleaf02 Apr 7, 2015 11:17 PM
    follansdave follansdave Apr 17, 2015 4:10 PM Flag

    Kai:
    The 3% dividend increase announced today is at the low end of what I expected but I think prudent given the lack of growth prospects evident right now. Some will be dissatisfied, but I don't see any fundamentals supporting more than that right now. Bloomberg way off as usual - they don't put much thought or analysis into their estimates imo.

  • Reply to

    No floor for this stock?

    by docleaf02 Apr 7, 2015 11:17 PM
    follansdave follansdave Apr 9, 2015 2:07 PM Flag

    Kai:
    Yes, while I still hold a decent position in PG, it is reduced by more than half versus when I established it in the $50-65 range. I continue to be neutral to positive on the stock long-term but am wondering if they will really find the key to reinvigorate business growth. In the meantime, I will continue to reduce the position somewhat through selling covered calls when the stock is north of $85-87. I have made a nice return doing that over time - more often than not, without having the stock called.
    Timing of the dividend announcement looks about right to me but I guess I would be pleasantly surprised if the increase is as large as 4.5 cents. Good luck.

  • Reply to

    No floor for this stock?

    by docleaf02 Apr 7, 2015 11:17 PM
    follansdave follansdave Apr 8, 2015 3:06 PM Flag

    Kai:
    Somewhat poetic, but I share your sentiment in this case. Not time to panic yet. On the other hand, neither do I expect good fundamental business news from PG in the near term. Until they find sufficient new ways to grow the core of the business, the non-core brand sell-offs will simply make their all-in numbers look even more anemic for a while. The stock looks fairly valued (or more) relative to the market now imo.
    Dividend increase is very likely in April but it isn't outside the realm of possibility that they could extend a quarter - but I would expect April and maybe about 3 1/2 cents per share or so. In the short run, the brand sales provide an additional cash infusion to continue fairly hefty dividend payouts. PG continues to generate lots of cash from its fairly mature businesses.

  • Reply to

    What's wrong with this stock.

    by exgasmaster Mar 2, 2015 2:20 PM
    follansdave follansdave Mar 18, 2015 2:43 PM Flag

    You are of course entitled to your own opinion and eating habits. You are not however entitled to your own facts. U.S. food preparation at home has dropped from 82% about 30 years ago to 69% today. Fat content of food prepared at home has dropped from 40% of total calories to 30%. Having said that, there are obviously still plenty of Americans who have not followed these trends.
    Crisco was launched in 1911 as a "healthier" alternative to lard when it was common for women to bake and fry several times per week at home. Such baking and frying at home are no longer common - certainly not anywhere near that frequency. As in turns out, the original formulation of Crisco was much worse for people than simple fats. But the trend in the business had fallen off long before that science was widely known.
    Crisco has recently been reformulated to remove most of the trans fats but the debate continues as to whether the current formulation belongs in a healthy diet.

  • Reply to

    How low we go?

    by rbrentbyrne Feb 19, 2015 1:30 PM
    follansdave follansdave Mar 11, 2015 4:21 PM Flag

    These kind of "I wonder" posts don't tend to draw very thoughtful comments. I suppose you know the quote about what opinions are like ... and that everyone is entitled to one. Of course that is true, but that doesn't make them a pretty thing to look at if one can avoid that.

  • Reply to

    How will strong dollar effect this stock?

    by younessi Mar 11, 2015 9:07 AM
    follansdave follansdave Mar 11, 2015 4:14 PM Flag

    Generally, a stronger dollar will hurt U.S, based but global companies like PG because the sales and earnings from the international business will be smaller when translated into U.S. dollars.
    On the other hand, sophisticated investors understand that connection and may have built all of some of it into the value of the stock as it stands today. That is hard to say. So generally, it is a negative for such stocks.

  • Reply to

    What's wrong with this stock.

    by exgasmaster Mar 2, 2015 2:20 PM
    follansdave follansdave Mar 5, 2015 8:35 AM Flag

    Doc - I partially agree with you. Of course, the CEO is responsible ultimately.
    As to keeping the Food brands, that's certainly debatable. Crisco is clearly a product well past its time - no one bakes or fries much at home anymore and the stuff is just not good for you. Pringles was ok as it is but an orphan with little future growth potential. Folgers more interesting as the buyer has done pretty well with it. But past generations of P&G CEO's missed major opportunities in coffeehouses (Starbucks) and single serve (GMCR) where the real growth and money was and is.
    Agree there has been almost zero creation of new brands by P&G but don't agree this is company specific - look at the data in U.S. consumer products and you'll find nearly zero significant new brand creation in the past 30-40 years. As I said, I don't have the answer to that but can assure you that Sunny Delight, Citrus Hill, Fisher Nuts, etc. were not the road to growth or profitability.

  • Reply to

    What's wrong with this stock.

    by exgasmaster Mar 2, 2015 2:20 PM
    follansdave follansdave Mar 4, 2015 5:54 PM Flag

    Doc:
    I didn't know McElroy but did meet Harness and Smale. Had the utmost of respect for both - particularly John Smale. However, I must point out that the returns on P&G stock in the 70's were miserable.
    The problem my friend is not in the stars but in the reality of the situation of how to grow a mature consumer products business. Generally, I don't feel that all of the good ideas have already been discovered - certainly not in tech. But, how many variations of Tide or Crest does one need?
    I don't have the answer but it is more complicated than the CEO imo.
    Good luck.

  • follansdave follansdave Feb 13, 2015 6:55 PM Flag

    Idiot. Say something accurate and of value or be ignored.

  • Reply to

    10,000 sold at 84.84

    by fstout57 Feb 9, 2015 7:44 PM
    follansdave follansdave Feb 9, 2015 7:49 PM Flag

    So?
    Small potatoes for a stock like this.
    Anything above 84 is a decent price for right now.

  • Reply to

    Costco PE of 28..

    by osulindrool Feb 3, 2015 5:15 PM
    follansdave follansdave Feb 5, 2015 7:45 AM Flag

    Sorry. I ignore snowcats, not you. Simply too much whining for me to bear.

  • follansdave follansdave Feb 4, 2015 4:56 PM Flag

    Is there any data here or just CEO bashing?
    Made in China? C'mon, get the facts and then we'll talk. Well over 90% of U.S. sales are made in U.S.

  • Reply to

    Costco PE of 28..

    by osulindrool Feb 3, 2015 5:15 PM
    follansdave follansdave Feb 4, 2015 4:51 PM Flag

    Kai:
    I don't put many people on ignore - but this is one who I don't choose to hear.

  • Reply to

    Anyone buying today?

    by icdcweb Jan 27, 2015 1:04 PM
    follansdave follansdave Jan 28, 2015 1:57 PM Flag

    Doc
    PG actually did see some lower costs in the last quarter but that was swamped by the exchange effects. The dollar won't strengthen forever, but that doesn't help right now.
    I don't know Taylor so I won't venture to guess whether he is similar to Lafley or different, nor in what ways.
    The issue with PG is and has been for many years lack of growth. Most of the new product and category innovation capability vanished by 1980 if not sooner. PG is not alone in this - very few truly new consumer products succeed in markets like the U.S.
    International growth (filling in the map) helped for many years but is starting to mature now as well.
    Sounds like PG needs a "Steve Jobs" of consumer products. Don't think I have ever seen one.
    In the meantime, PG will be solid but slow growth business which generates a ton of cash and pays a hefty dividend. Not really exciting, but has a place in many portfolios.

  • Reply to

    Anyone buying today?

    by icdcweb Jan 27, 2015 1:04 PM
    follansdave follansdave Jan 27, 2015 2:44 PM Flag

    Good question - it's a big miss even if all currency driven.
    Haven't seen any new opinions from analysts. My gut feeling is that it would be hard to view PG as a screaming buy at this point and some more selling could follow. $84 might be a better re-entry point if it goes that low.

DMND
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