They have to address two interrelated issues.
1. What happened to Q4 margins and why?
2. Why whatever happened in Q4 will not impact 2014 Q3 and Q4.
If they successfully address those two issues SODA should pop big time.
If they fail at those two issues, I think it is over for this company.
They, the management have to know this.
I don't see how you can come up with some half baked idea that the analysts will buy. The analysts have to believe after this call ends that SODA will do very well in the last half of the year, that KO/GMCR is not a major threat to SODA's existence and I believe the analysts have to believe that there is a good chance that SODA will partner or merge or etc..with a major player such as PEP.
Picture that you are considering either selling your long position or buying into a long position on SODA.
Then you read an article, a fair article.
It points out that the stock is perhaps oversold. However, there are "headwinds" as mentioned by management.
It points out that KO and GMCR activity validates concept. However, competition is just that, competition and who knows what that will mean?
It points out that relative to competitors ratios SODA is a great value, but don't forget those headwinds and that competition.
So, do you buy in. I think not? Do you sell your long position or hold on? Maybe you sell.
This picture won't change unless management gives a reason to change it or PEP or someone else enters the picture.
Are you stupid? Did you expect that most people posting here would not be investors in SODA? Just curious.
The thing is that the stock has been falling based on the expectation that there will be no positiveness.
In the past it was said that at the first bad news, SODA would crash and that was true.
Now what is true?
What kind of bad news is possible, likely..?
My sense is it's all the bad is cooked in and the slightest bit of positive will cause the shorts to cover for fear no more bad news coming.
I'd bet greater than 50% odds tomorrow is up as the smart guys know this and that we close in low to mid $40s on Wed.
It has been said here before “If you don’t cannibalize yourself, someone else will.” Steve Jobs said that.
We are reaching a tipping point where the big boys know what the inevitability of success for home carbonation will mean and they know it's better to be part of it then left behind.
There are still some kooks left who come here and post absurdities. The short argument about the fad thing is over. The shorts can only hope that competition ruins SODA. Even that argument becomes nonsense as it becomes evident there is plenty of room for a market that if it achieves just 10% penetration might be $30 billion world wide and maybe far more and maybe far sooner as we flow over that tipping point.
Makes sense to me. Thirst is a thing of the past like horse drawn carriages. Peoples' attitudes are constantly changing and they are just fed up with being thirsty anymore. The quicker Pepsi accepts this the faster they can get on to dealing with real business issues.
If you think about it, you do have to wonder. If KO wants coffee, why didn't they just but the entire company? If they want to cover the just in case home carbonation really works and is a threat, why didn't they buy the entire company?
First question-They don't really just want coffee.
Second question-They don't know if it really works.
So, my GUESS is KO doesn't know if it really works and if it really is a threat.
If it's not really a threat both GMCR and SODA are in trouble.
If it is really a threat, GMCR hasn't shown and end product that really works.
Think it through and post your take.
For now, given the pre earnings warning and the speculation on PEP etc., the longer there is no news the lower the stock price, IMO. I doubt that the conference call will have any news and therefore not likely to lift stock price. A reiteration of what the warning was won't likely drop stock either, but if the perception is that SODA is not working toward a major deal or partnership is reinforced, price will go down substantially.
I would hope that these guys would step back from their egos and indicate a willingness to work with the major players in this business.
I believe, like it or not, that the perception of these guys as egotistical and thinking they can make it happen against companies hundreds of times their size hurts stock price in the near and mid term. Achieving a billion in 2016 is a major feat for SODA, but really irrelevant in an industry this large.
You do understand that the CEO of either company with their hands tied behind their backs can have a secretary put a phone to their mouths and have a the majority interest in SODA bought with what is relatively pocket change and then shut the company down? Yes, we might then make money, but either company can, tomorrow, set about finding a way to do what SODA does and get it done with a couple billion dollars.
So, stop being cavalier, a euphemism for stupid, and recognize that neither company is folding up their tent and turning the soft drink industry over to SODA. Fact, if SODA doesn't do a deal of some kind with PEP, KO or another major, SODA won't likely survive. Either competition will put them under or the business plan will fail.
Re #1-Consumers weren't buying and they needed to get inventory down. Always look for the most likely reason because that is probably the reason.
Re #2-Get the bad news out of way because the recovery time is probably the same no matter when released and then let the positive news do its job. There is also the trust issue and they knew the bad news within days of end of quarter.
My sense is that SODA has had offers and they have turned them down for a variety of reasons. This is good and bad. Good in that they should do as well as possible and bad in that both KO and PEP can beat SODA at this if they are forced. To use a cliche, let's hope SODA doesn't overplay their hand.
PEP is probably running numbers on a variety of ways to approach home carbonation. The one thing they can't do without partnering is use the technology to brand their own machine. They can make packets or syrup bottles that work as has happened to GMCR. But, picture a Sodastream machine well designed that has Pesi logo on its sides. They can't do that without some kind of buyout or partnership.
Besides SODA and GMCR, what other possible system? The way I see it, PEP knows it can be on shelves with new system in a matter of weeks, perhaps a couple months. Whereas KO can't deliver for a year or more if at all. So, PEP has time. It could even be that they figure they might never need to partner. They could always make syrup available in a package that works either technology.
Here is article:
Pepsi CEO, Indra Nooyi has said the company is running “multiple” at-home carbonation tests, but will only use technology that has already proven to work.
In what may have been a swipe at the Coca-Cola Co, Nooyi told analysts in a conference call today (13 February) that it is “premature to commit” to technology that doesn't yet exist. This month Coca-Cola announced a US$1.25bn partnership with Green Mountain Coffee Roasters (GMCR) over the yet-to-be-launched Keurig Cold platform.
“GMCR is one option,” Nooyi said. “Interestingly there are multiple technologies out there. What we've been sorting through for the past 12 months, is making sure we don't lock and load with any technology until the technology has proven out.”
Nooyi, who was talking after PepsiCo released solid FY results today, said that the company has been working with a number of partners on tests over what she called “another distribution channel for sparkling beverages”.
She added: “We have to align with partners who we are sure will commercialise the product so we are working with multiple people.”
Asked if innovations such as at-home carbonation will change PepsiCo's relationship with its outisde bottlers, Nooyi said: “We have a good relationship with our franchisee bottlers, and they see the changing environment too. They want to work with us to make sure that together we grow the overall franchise.”
Nooyi also said change for the company will be reduced because it owns 75% of its bottler system.
“We don't have the overhang of a big independent bottler to deal with any more,” she said
There has to be a reason for the delay on earnings. I can, now, only think of one thing. Management believes there will be more good news to help assuage the earnings report.
In theory the delay should only be relative to getting the financials prepared. There could be a major debate with the auditors about accounting for something that matters and they don't want to give the date until agreement is reached.
What exactly is your point?
Are you old enough to remember the huge decline in beef and red meat sales a couple decades ago? Yet today people are eating plenty of beef. After a while people had enough of bean sprouts.
There are cycles, but there is little doubt that the carbonated beverage industry is going to be in the mega billions for the future leaving plenty of room for SODA.