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    Default remember SBUX ?

    (snip)"Starbucks Earnings Sink 21%
    By LAURIE J. FLYNN
    SAN FRANCISCO — Starbucks, faced with a sharp drop-off in customers, reported on Wednesday that earnings declined 21 percent during the second quarter.

    Starbucks reported that net income declined to $108.7 million, or 15 cents a share, from $150.8 million, or 19 cents a share, in the year-ago quarter. The company said revenue rose 12 percent, to $2.5 billion.

    The report came just a week after Starbucks, the world’s largest coffee chain, warned of lower-than-expected earnings and cut its full-year forecast, citing a decline in quarterly sales and describing the economic environment as the weakest in the company’s history. Wall Street analysts had forecast 19 cents a share for the quarter.

    “Fiscal 2008 is a transitional year for Starbucks and, while our financial results are clearly being impacted by reduced frequency to our U.S. stores, we believe that as we continue to execute on the initiatives generated by our transformation agenda, we will reinvigorate the Starbucks Experience for our customers,” Howard Schultz, who is chairman, president and chief executive, said in a statement.

    Mr. Schultz returned as chief executive in January in hopes of turning the company around, replacing James Donald.

    Shares of Starbucks closed up 3 cents, at $16.23, before the report was issued.

    Mr. Schultz said the results were heavily influenced by the company’s American business, which accounted for 77 percent of total net revenue.

    Starbucks, which had 125 stores when it went public in 1992, now has 15,000 stores in 44 countries. But the company has struggled to maintain its differentiation in the face of growing competition. Most recently, Starbuck’s has suffered the effects of the crisis in the housing market, which has put a pinch on sales, particularly in California and Florida. Mr. Schultz said that customers were simply not visiting Starbucks stores at the rate they once did. "(snip)

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    Default Re: remember SBUX ?

    as the news get's bad, it becomes an evermore reason to purchase. almost to the point where it's about to become a good contrarian play.
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    Default Re: remember SBUX ?

    I've seen this reported as something like "with the US economy going the way it is, people find they don't really need $4 coffees anymore"
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    Default Re: remember SBUX ?

    mcdonalds has advertising to the effect of 'four dollar coffee is dumb', as they sell much cheaper espressos.

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    Default Re: remember SBUX ?

    Quote Originally Posted by person View Post
    I've seen this reported as something like "with the US economy going the way it is, people find they don't really need $4 coffees anymore"
    Yes, Just like People told in 2002, nobody would buy expensive Apple Computers given the way the economy was. Apple was trading at$6 a share.

    Now Apple is trading 30x that price. People talk about single investment like Gold and how well it has done in the past years. There are plenty of stocks that have trounced gold.

    Yet, People don't go on running shady web-sites based on their single asset pick

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    Default Re: remember SBUX ?

    ^^^ and that says what about Starbucks ?

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    Default Re: remember SBUX ?

    Quote Originally Posted by Melonie View Post
    ^^^ and that says what about Starbucks ?
    Starbucks Customers are almost as fanatic as Apple Customers

    The argument against Apple was exactly similar to Starbucks. Who would pay $2000 for a Computer when you can pick up Dell (the McDonalds analogy here)?

    * People are losing jobs left, right and center and they will cut down on luxury items
    * Outsourcing will kill USA and we'll all be shopping in Dollar Stores

    Yeah Welcome back to 2001-2002

    If you are into stock picking, you wouldn't go wrong picking Apple, Starbucks, Whole Foods & Google during downturns

    Of course, you should add your own thorough analysis and read annual reports and be comfortable about the product and the market that you are analyzing.

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    Default Re: remember SBUX ?

    well, I generally confine myself to investing in businesses that A- do not have a declining market share, B- do not have shrinking profits, and C- do not face rising costs of doing business. That leaves Starbucks off my list on all three counts.

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    Default Re: remember SBUX ?

    Quote Originally Posted by Melonie View Post
    well, I generally confine myself to investing in businesses that A- do not have a declining market share, B- do not have shrinking profits, and C- do not face rising costs of doing business. That leaves Starbucks off my list on all three counts.
    All those three fit Apple in 2002. Shrinking marketshare in recession is not the same as shrinking market

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    Default Re: remember SBUX ?

    Starbuck's will not go under, but, the growth has stopped for now. Growth, or a perception of growth, drives a stock price. I believe that they are making changes that will enhance their model. However, we are in a recession and this cannot be dismissed on anything the carries a premium over a similar product. McDonalds will become a factor, as has Dunkin Donuts. The comparison to Apple, I feel is flawed. IPOD and similiar innovations drove Apple to where they are now. A similar arguement would be that SBUX will invent a new beverage, or modify an exsisting one. They have already done that and that is how they got where they are now. I like the company, but to deny that this recession will not affect them, to deny they have operation problems, to deny that commodity prices will not affect them, to deny new wage laws will not affect them, I feel is misguided.

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    Default Re: remember SBUX ?

    Quote Originally Posted by texasdancer View Post
    Starbuck's will not go under, but, the growth has stopped for now. Growth, or a perception of growth, drives a stock price. I believe that they are making changes that will enhance their model. However, we are in a recession and this cannot be dismissed on anything the carries a premium over a similar product. McDonalds will become a factor, as has Dunkin Donuts. The comparison to Apple, I feel is flawed. IPOD and similiar innovations drove Apple to where they are now. A similar arguement would be that SBUX will invent a new beverage, or modify an exsisting one. They have already done that and that is how they got where they are now. I like the company, but to deny that this recession will not affect them, to deny they have operation problems, to deny that commodity prices will not affect them, to deny new wage laws will not affect them, I feel is misguided.
    True. Finally I find someone who at least speak the same language.

    AAPL & SBUX are different companies. The analogy was a simple one to remove the misguided concepts people have about Stocks and Cash Producing assets.

    Put it in another way,
    For someone who think Stocks are not assets and USA is going down the dumps, AAPL & SBUX are the same company and you can use them as analogies to explain concepts

    For someone like you, who not only know that Stocks are assets, but how it is Valued, the explanations and analogies have to be more nuanced.

    Its the same as saying that you live in NY to a foreigner, even if you live in NJ. But for an NJ person you tell the exit #.

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    Default Re: remember SBUX ?

    people drank coffee before starbucks. and they are switching (at least in seattle, where the company was started) in droves to the cheaper alternatives (mcd's and such).

    starbucks isn't bulletproof. 4-5 dollar milkshakes for grownups are a luxury good not likely to last through this depression.

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    Default Re: remember SBUX ?

    Quote Originally Posted by miabella View Post
    people drank coffee before starbucks. and they are switching (at least in seattle, where the company was started) in droves to the cheaper alternatives (mcd's and such).

    starbucks isn't bulletproof. 4-5 dollar milkshakes for grownups are a luxury good not likely to last through this depression.
    OK, for you I have to use the Apple analogy

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    Default Re: remember SBUX ?

    uh, no. coffee isn't really the same kind of good. it's highly substitutable, whereas apple, not so much. plus apple created its own complementary goods market, and starbucks has tried, but again, it doesn't work the same way with coffee.

    starbucks is already taking price hits as their supplier costs go through the roof. apple made its own hardware, thus keeping both hardware and software money.

    starbucks doesn't have its own coffee fields, y'know?

    so the analogy fails, and hard.

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    Default Re: remember SBUX ?

    Quote Originally Posted by miabella View Post
    uh, no. coffee isn't really the same kind of good. it's highly substitutable, whereas apple, not so much. plus apple created its own complementary goods market, and starbucks has tried, but again, it doesn't work the same way with coffee.

    starbucks is already taking price hits as their supplier costs go through the roof. apple made its own hardware, thus keeping both hardware and software money.

    starbucks doesn't have its own coffee fields, y'know?

    so the analogy fails, and hard.
    Nothing's more substitutable than an Apple Computer, iPod & an iPhone especially in the era of Web applications and Linux. People buy Apple for perception just like Starbucks.

    Apple don't make their own hardware. They still have to buy Chips, Memory, Flash and LCDs from suppliers.

    Apple outsources most of its stuff, so having their own fields is wrong analogy. In fact except Software, every Apple stuff is "Made in Taiwan"

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    Default Re: remember SBUX ?

    Quote Originally Posted by xanfiles1 View Post
    Yes, Just like People told in 2002, nobody would buy expensive Apple Computers given the way the economy was. Apple was trading at$6 a share.

    Now Apple is trading 30x that price. People talk about single investment like Gold and how well it has done in the past years. There are plenty of stocks that have trounced gold.

    Yet, People don't go on running shady web-sites based on their single asset pick
    It ain't the computers with Apple, it's the Ipod.

    When Starbucks comes up with a coffee version of the iPod, maybe they'll do better. Until then, they're just an over-exposed chain of stores that sells overpriced coffee.

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    Default Re: remember SBUX ?

    Quote Originally Posted by miabella View Post
    people drank coffee before starbucks. and they are switching (at least in seattle, where the company was started) in droves to the cheaper alternatives (mcd's and such).
    What are you talking about? When was the last time you were in Seattle? People don't drink McDonalds coffee there! There are Starbucks everywhere and I do not see people "switching" to cheaper coffee shops. They may opt to give their business to smaller, local coffee shops, but that isn't necessarily cheaper.
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    Default Re: remember SBUX ?

    ^ I believe miabella lives in Seattle

    I gotta say, I still see lineups out the door at a lot of Starbucks. Maybe it's my area. But I saw a lineup out the door and halfway down the block at a Starbucks in DC last week.

    Starbucks has that durned familiarity and branding down pat. I'm still considering them as a loooong term buy.

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    Default Re: remember SBUX ?

    yes, i live in seattle, and sbux is not getting as much business here in favor of cheaper options.

    not everyone in this town makes 70-100k per year as a programmer or engineer. that 1-2 times a week latte for many has to go now.

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    Default Re: remember SBUX ?

    I have SBUX as a long term buy, and i'm not really all that worried. Stocks go up and down, so does the market and economy. I recall someone on here earlier calling this a depression. I just don't see that...the economy isn't great but this is no depression in comparison. Grand Theft auto 4 doens't sell the way it did in a depression, neither does a Nintendo WII. In a depression people don't have jobs and they don't have food, let alone money for game cube.
    Back on track, sorry. I think SBUX will take a dip for sure, but it's going to pick right back up once the economy jumps again. Yes, that may be 40 years, but what the hell....why not buy cheap and not touch it for say 50 years. SBUX isn't dying, it's just sitting around waiting. People WANT it, and when the money is back around it will boom. As scarlett_van said. They've got the branding down pat...and even in a society that's down branding means a lot to a lot of people.

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    Default Re: remember SBUX ?

    Quote Originally Posted by ajbaer View Post
    I have SBUX as a long term buy, and i'm not really all that worried. Stocks go up and down, so does the market and economy. I recall someone on here earlier calling this a depression. I just don't see that...the economy isn't great but this is no depression in comparison. Grand Theft auto 4 doens't sell the way it did in a depression, neither does a Nintendo WII. In a depression people don't have jobs and they don't have food, let alone money for game cube.
    Back on track, sorry. I think SBUX will take a dip for sure, but it's going to pick right back up once the economy jumps again. Yes, that may be 40 years, but what the hell....why not buy cheap and not touch it for say 50 years. SBUX isn't dying, it's just sitting around waiting. People WANT it, and when the money is back around it will boom. As scarlett_van said. They've got the branding down pat...and even in a society that's down branding means a lot to a lot of people.
    Couldn't have said it better.

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    Default Re: remember SBUX ?

    Quote Originally Posted by miabella View Post
    yes, i live in seattle, and sbux is not getting as much business here in favor of cheaper options.

    not everyone in this town makes 70-100k per year as a programmer or engineer. that 1-2 times a week latte for many has to go now.
    I'm sorry, my experience living in Seattle all but a month of the last 10 years of my life, I have never seen anyone in Seattle favoring "cheaper options" for coffee. First of all, there are very few McDonalds around Seattle at all, and I do not see people going there for coffee. People in Seattle will go to Starbucks or if they don't wish to support a chain they will go to a local coffee shop. Starbucks is NOT hurting for business in Seattle, not by a long shot. And the local shops are doing great too. I did not see people drinking cheaper coffee in Seattle and I do know that not everyone in Seattle is a programmer.

    Maybe our experiences are different because we lived in different areas? I lived very close to downtown and worked an office job. Maybe out in Everett people are drinking cheaper coffee, but I did not see evidence of that in the city of Seattle.
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    Default Re: remember SBUX ?

    Quote Originally Posted by xanfiles1 View Post
    Starbucks Customers are almost as fanatic as Apple Customers.
    I can't buy this argument 100%. though there is a sub-culture of people that still buy Apple because they are either anti-consumerism (which no longer makes sense) or they are anti-pc, anti-microsoft...(which is starting to make no sense also as Mac's have aligned with MS and PC platforms)

    both segments are smaller now. though, Demand for graphic artistry, digital photography, video and sound have dramatically increased in the last 5 years... apple's growth correlates to adobe's sales volumes pretty darn close.
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    Default Re: remember SBUX ?

    there's more than everett in the greater seattle area. also, i work near five starbuckses in dt seattle and, well, customer count has dropped off. going from (example) 100 customers/day to 85/day is not noticeable to most, but it's real to the business accountants at monthend. it will look like roughly the same amount of people until it suddenly isn't, but the numbers were dropping the whole time.

    also, if apple has to make an ipod cost 500 instead of 400, people who buy ipods will only drop a couple of points overall, because it's already kinda pricey as a good (and incidentally, sales of cheaper variants at 1/2 to 1/3 the price are doing very well, branding brilliance or no).

    starbucks has a very different situation with cost of ingredients. it is a milkshake for adults, and branding or no, people aren't going to pay 8, 10, 12 bucks for a milkshake as the cost of ingredients goes up. and starbucks can't eat those increased costs indefinitely. so, they are screwed, but such is the world of business.

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    Default Re: remember SBUX ?

    Quote Originally Posted by miabella View Post
    there's more than everett in the greater seattle area. also, i work near five starbuckses in dt seattle and, well, customer count has dropped off. going from (example) 100 customers/day to 85/day is not noticeable to most, but it's real to the business accountants at monthend. it will look like roughly the same amount of people until it suddenly isn't, but the numbers were dropping the whole time.

    also, if apple has to make an ipod cost 500 instead of 400, people who buy ipods will only drop a couple of points overall, because it's already kinda pricey as a good (and incidentally, sales of cheaper variants at 1/2 to 1/3 the price are doing very well, branding brilliance or no).

    starbucks has a very different situation with cost of ingredients. it is a milkshake for adults, and branding or no, people aren't going to pay 8, 10, 12 bucks for a milkshake as the cost of ingredients goes up. and starbucks can't eat those increased costs indefinitely. so, they are screwed, but such is the world of business.
    People going to starbucks never paid for the coffee. They paid for the branding

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