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

To: benwood who wrote (737)	6/30/1999 8:14:00 PM
From: Daniel Chisholm	Read Replies (3) \| Respond to of 1506

I'm a former SBUX short (gee, that sounds like an AA opening line, eh? ;-), and to be quite honest the reaction to this announcement surprised me. My rationale for shorting SBUX was that its spectacular growth was not organic (they chiefly grew through opening new stores, which they financed via equity leveraging), its ROE was relatively low and unspectacular, and that ultimately a fair value would be in the $5-$10 neighborhood per share. Even if I was right, I was sure wrong enough to lose a big pile of money(!). And yet, even as someone who still thinks SBUX is overvalued (admittedly for my same old reasons), I do not understand why opening up a new business venture will impact earnings (i.e., Capex != expense). It almost sounds like a convenient excuse for falling short of consensus earnings, when the real cause is elsewhere (probably something as mundane as subpar growth in the number of new stores opened or the growth in same store sales). Anyhow, I don't have any plans to re-short SBUX anytime soon, and I still very much enjoy their product (though it seems just too darn expensive for the Scottish blood in me). - Daniel