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John Eastman is a writer, mixed media artist, and founder of several businesses ( ( over 25 years of hands-on business and entrepreneurial experience. He currently works and resides in a studio loft in Pittsburgh, Pennsylvania and NYC. Mr. Eastman... More
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  • Scarlett Johansson; The First Catalyst For SodaStream In 2014

    The manufacturer of home beverage carbonation systems SodaStream International SODA issued a warning earlier in the week indicating it was lowering its fiscal 2013 guidance after sales from the Christmas holiday came in lower than expected. SodaStream is the leading manufacturer and distributor of home beverage carbonation systems, which loyal customers use to convert ordinary tap water into carbonated soft drinks and sparkling water. The company promotes its products with a environmentally friendly, health and wellness element to them. In its preliminary numbers, the company expects Revenue to be approximately $562.0 million vs. its Q3-2013 projection of $567 million, Adjusted net income to be around $52.5 million vs. its Q3-2013 projection of $65 million. It estimated that Net income would be $41.5 million. Essentially the company came within $5 million of its revenue target, but fell quite short of its earnings projections. This is the second quarter in which the firm has missed its earnings target.

    So what happened?

    A challenging holiday selling season, lower sell prices, unexpected higher product costs, and currency exchange issues, all contributing to the underperformance. The company has an overall revenue guidance of reaching $1 billion in annual sales by the year 2016. One note to consider is that Sodastream grew its revenue to nearly 30% for the entire 2013 period.

    But apparently the market makers sensed fear with the disclosures, despite overall revenue growth, and similar underperforming results from other retailers for the season, sending the shares down to a 26% drop, down about 50% from 2013 highs. SODA is trading at current day $38.00, but still on the bottom of its 52wk Range of $36.38 - $77.80. Several analysts believe the sell off provides an entry point opportunity. Other are looking at a $30.00 range as an entry point. The panic sell off didn't reach over the aisle to other carbonated beverage players such as Coco-Cola KO (a Warren Buffett favorite) and PepsiCo PEP so it does not appear to be a industry-wide downgrade. There has always been discussion that the in home carbonated beverage maker was a trendy item, but again, revenue for 2013 gained nearly 30% not at all indicating that SodaStream products have become unpopular with consumers. SodaStream products are available at more than 60,000 retail stores in 45 countries around the world, including over 15,000 retail stores in the United States.

    Enter Scarlett Johansson as a catalyst

    So what's ahead for SodaStream? Enter 28 year old superstar actress Scarlett Johansson and the U.S. Super Bowl football game. The company announced that Johansson will be featured in the upcoming Super Bowl XLVIII ad on Sunday, February 2, 2014, and become the face of a new marketing campaign. Her role is what the company calls a Global Brand Ambassador. Johansson is apparently a long term fan and user of the product and company officials are confident that her face on the company's campaign will assist consumers embrace the home soda making concept even more, and help it become the future of the beverage industry. She is essentially the first catalyst event of 2014 for SODA.

    While beauty and star celebrity as a spokesperson has proven to be significant for many firms in the past, investors and analysts still measure performance by numbers. SodaStream's fourth quarter results may disappoint, causing further stock price degradation to low 30's, a good buy-in opportunity as well. But if it keeps its revenue growth up in Q1-2014, and improves its Net, the market will likely respond positively and could see a return to a mid-52wk range of 50's. The Scarlett factor may be the first catalyst event for that upward climb. As a note, in the first six months of 2013, the stock gained nearly 62%, then declined in the second half to the stream of 32%, but still closed the year up 9.5%.

    Tags: SODA, KO, PEP
    Jan 16 2:45 PM | Link | Comment!
  • Why A Risk With Chelsea Therapeutics Could Pay Off Soon

    If you have followed the difficult path that Chelsea Therapeutics CHTP has had in the past with its lead drug Northera, then you're aware of challenges, and ups and downs that the company has faced. Northera is designed to treat symptomatic neurogenic hypertension symptoms (chronic drop in blood pressure on standing up) as related to Parkinson's disease. The FDA granted Chelsea orphan drug status that provides for a seven-year marketing exclusivity from the day of approval which was in 2007.

    But a catalyst event right around the corner of the new year may make the frustrations pay off for investors. The possible good news may be in January of 2014 as the FDA will again be reviewing the drug after an initial false start of sorts. As reported Chelsea's 306B study for Northera was given priority review along with FDA panel approval recommendation in early 2012. But to the surprise of many the FDA said the data was deemed to be inadequate and did not provide sufficient evidence to prove the efficacy of the drug and therefore rejected it.

    In a turnaround, the FDA in February of 2013, determined that Chelsea's data from the 306B study could be used and did validate that the data showed compelling evidence of short-term clinical benefit. On the long-term or durability side, there is still a skepticism for approval. FDA has signaled a willingness to approve with a commitment by Chelsea to conduct a longer-term post-marketing study. Chelsea has countered with a study which will enroll 450 NOH patients and assess a dizziness reduction endpoint. Study 401 will evaluate the clinical efficacy and safety of Northera versus placebo over a 17 week (maximum) treatment period consisting of an initial, open-label dose titration (up to 2 weeks), followed by a washout period (up to 3 weeks), followed by a 12 week treatment period on a stable dose. The primary outcome measure of the study is to evaluate the duration of clinical benefit of Northera. The FDA's Cardiovascular and Renal Products Committee will be the one again reviewing the drug as with the 306B study.

    All or nothing for Chelsea

    The company projects the revenue estimate for Northera to be between $300-$375 million per year for the first five years of the product launch. Northera is pretty much the biggest cookie in the cookie jar for Chelsea Therapeutics as the company had cut back R&D spending and staff for its rheumatoid arthritis drug upon the initial rejection of Northera. So the January FDA decision could be a company make it or break it event. One note to consider as guidance and a possible confidence factor is BAKER BROS ADVISORS, prominent in small cap biotech investment firms, recently increased their position in Chelsea by 1 million shares, perhaps indicating a positive outlook.

    Chelsea current is trading at $4.28 with a $302 Million Market Cap. The January 14th FDA panel review should propel the stock and the company in one direction or the other.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: CHTP, long-ideas
    Dec 31 11:38 AM | Link | Comment!
  • Eastman Kodak Equals Rough Times Ahead

    Eastman Kodak (EKDKQ) has been in bankruptcy proceedings since January of 2012, and trying to emerge from it by selling off the firm's patent inventory, has delayed announcing the outcome of its patent auction. In addition the company extended the auction, reportedly due to lower than expected bids, and continued discussions with bidders. This has been reported on multiple media sites as The Chicago Tribune Company. Officials did not specify the length of the extension period. The company is required to submit regulatory filings about the auction that include financial projections. Prior to the announcement of the extension, the company was intending to disclose auction winners on August 20th. The process that began earlier in August is a means to an end of the company's plan to save itself and emerge from bankruptcy.

    This article is a follow up of one written on August 9, on The Chairman's Blog titled "Eastman Kodak holds a digital patent yard sale while reporting financial results"

    Last week the Rochester, NY based firm reported a severe decline (27%) in revenue) but with Quarterly Earnings improving for its Commercial and Consumer segments by a combined total of $82 million while reporting a net loss of $299 million, compared to $179 million in the second quarter of 2011. On a good note was its cash balance of $1.257 billion.

    However, the firm was looking to the auction of its 1,100 patents to lift it out of bankruptcy and to bolster its cash reserves as it flushes out its operations further with expense reductions. This was viewed as a key component in their ability to not only emerge, but the continue on as a company. Reported on multiple media sites was the projected value of $2.2----$2.6 billion of the portfolio of digital imaging patents. Reportedly the initial bids from two potential buyer groups, each reportedly led by Apple, Inc. (NASDAQ:AAPL) and Google, Inc. (NASDAQ:GOOG), are said to have come in between $150 million and $250 million.

    Now as the auction period is extended, analysts do not see a positive picture emerging. If the amount of net proceeds from the auction is significantly lower, the company may have to file a new or significantly altered plan to emerge from chapter 11 proceedings. With a current quarterly loss as reported at nearly $300 million, the company could be in much worse financial condition than earlier perceived.

    Even with expense reductions, the losses will be tough to overcome in the next 12-18 months. This also does not take into consideration how research and development and new product offerings will be affected. The core reason that the 131-year-old company has struggled and fallen into a dire financial in the first place, was due to its inability to transform itself into a digital company from being a film photography company. New and imaginative products are needed to stay afloat in the ever-fast paced world of digital technology. Those products need funded in order to emerge. Eastman Kodak may survive but has a tough road ahead of it to do so. Based on recent news developments and the markets declining response of the past few days events, it looks like Eastman Kodak may be company of the past and not a forward thinking firm to invest in.

    Aug 15 3:46 PM | Link | Comment!
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