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Non-Tech : Starbucks (SBUX) -- Ignore unavailable to you. Want to Upgrade?

To: Paul K who wrote (734)	6/30/1999 6:08:00 PM
From: Sam	Respond to of 1506

Bad news latte lovers ... biz.yahoo.com "Shares of retail coffee giant Starbucks Corp. (Nasdaq:SBUX - news) fell more than 10 points after it warned that fiscal 1999 profits would not meet Wall Street targets due to costs associated with the launching of its Internet operations. Starbucks was traded at 27 after hours after closing up 1-1/4 at 37-9/16 during the day, traders said." I've been watching SBUX from the sidelines -- wondering if the so called "portal" can deliver. The category may be worth $100B, but what % of that is SBUX going to get? Perhaps this will be just a bump in the road ... and a possible buying opportunity. $am

To: Paul K who wrote (734)	6/30/1999 6:28:00 PM
From: Paul Berliner	Read Replies (3) \| Respond to of 1506

The stock is down $10 after hours............Attention SBUX LONGS: I feel for 'ya. Personally, I planned on shorting this company when it would become apparent that same-store sales are slowing, which I didnt think would occur for another year or so. The SBUX life cycle will be the same as any other specialty retailer's life cycle - especially for companies operating 'niche' eateries. The scenario goes as follows: Company opens up coffee shops in major markets. Business booms - more stores are opened, internationally & even in non-major markets. Company is under tremendous pressure from Wall Street to maintain a certain revenue and earnings growth rate. The only way to satisfy this is to open up more stores. The openings of additional stores and occasional price hikes enable the company to satisfy Wall Street's expectations for quite an extended period, and the stock rises accordingly. The company continues its agressive expansion, even opening stores within 1 block of other stores in certain major markets (i.e. NYC). The company begins to open stores even in certain geographical locations where coffee is not a popular beverage or the population of that area is not of the spendthrift pedigree that will pay over $2 for a cup of coffee, even though they can readily afford it. Inevitably, same-store sales decline, and the company, unable to satisfy Wall Street using its former gameplan, seeks out any activity that will enhance revenues & earnings, such as making a bid for a company that will pick up the slack, even if that company is in a totally different business (i.e WSM, which owns Pottery Barn). The plans backfires and the stock is neatly halved, the first markdown in a slow, painful decline that will ultimately end with the removal of current management. So what popular company has already fulfilled this entire cycle? How about Boston Chicken. Don't bother trying to punch up a quote. Of course, SBUX does not have the debt burdens that plagued BOSTQ, but the stock will suffer anyway because there is no more growth - every geographical market has been saturated with starbucks' and it is now imprudent to open any additional units. SBUX stock will soon become merely a novelty item. To me the first sell sign was over a year ago when they came out with those horrible-tasting coffee popsicles. If I were SBUX mgmt, I would've even mixed the cheap beans into the Arabica beans to save some money before I bothered to embarrass myself by conjuring up an Internet venture.