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Technology Stocks : Jimbo's Playhouse/CPQ -- Ignore unavailable to you. Want to Upgrade?

To: Mao II who wrote (4841)	10/30/1999 7:12:00 AM
From: Mao II	Respond to of 12663

Thread: This is sorry news. There was a great story in the journal this past week that covered the extent of the disaster at HSY, one of my favorite companies (as opposed to stox), brought on by a foray into the land of ERP and supply-chain software. SAP, SEBL, MANU -- may they get dipped and coated!!! M2 FOCUS-Computer glitch haunts Hershey's Halloween sales (Updates; edits; adds comment from Kroger in 15th graf) By David Morgan PHILADELPHIA, Oct 29 (Reuters) - Halloween could turn out to be a real horror story for Hershey Foods Corp. (NYSE:HSY - news), the leading U.S. candy maker, whose distribution channels continue to be haunted by problems with a new computer system, analysts say. The maker of Hershey's chocolate bars and Kisses, Reese's Peanut Butter Cups, Kit Kats and Twizzlers has not been able to get all of its Halloween inventory onto store shelves soon enough to fill the plastic orange jack-o'-lanterns of trick-or-treaters, who are expected to stalk American neighborhoods on Sunday evening. Analysts on Wall Street had expected the gremlin in Hershey's $112 million order-and-distribution system to be exorcised by mid-October. But now they fear lingering problems could jinx candy sales through Christmas and maybe even into Easter. ``This is serious stuff. The fourth quarter represents about 40 percent of profits, and Hershey could lose $100 million in sales between back to school, Halloween, Thanksgiving and Christmas,' said Merrill Lynch analyst Leonard Teitelbaum. The Hershey, Pa.-based company had $4.44 billion in revenues last year. Most serious is the potential for a 0.5 percent loss in U.S. market share to privately held Mars Inc. and Nestle SA , as consumers who find store shelves bare of Hershey products switch to rival brands. Hershey, which has had no production problems, also must face the potential costs posed by pallets of undelivered ``Cat 'O' Lantern' milk chocolate snacks, Reese's Peanut Butter ``Pumpkins' and other seasonal goods marketed in highly decorated holiday wrappers only at this time of year. The company's computer system, which uses software from SAP AG and Siebel Systems Inc. (NasdaqNM:SEBL - news), began operating in July. But it quickly presented the 1,200-strong sales force with a steep learning curve. Managers are now expected to have the upper hand by the first quarter of 2000. Industry executives believe Hershey has not been able to fill orders at 100 percent and has resorted to flying some shipments out to keep relations sweet with key customers such as Kmart Corp. (NYSE:KM - news) and Wal-Mart Stores Inc. (NYSE:WMT - news). But some analysts contend the difficulties posed by Hershey's computer are temporary and say serious threats to the underlying business are about as real as the boogey man. ``It's too alarmist,' said Goldman Sachs analyst Nomi Ghez. "They clearly have a problem. I think it is a fixable problem. It is a short-term problem. Yes, they're probably going to lose some market share. But their brands are very strong and consumers are not going to forget them. ``I think they'll recoup lost market share, but probably at some cost to them,' she added. Company officials admit that relations with some business customers have been strained but say there is sure to be enough sweet stuff to go around this weekend. A spokesman for Cincinnati-based Kroger Co., which operates 1,410 supermarkets and 797 convenience stores in over 30 states, said Halloween shipments from Hershey have been late. But the retailer has managed to avoid shortages by ordering early. ``Consumers should have little problem finding Hershey's candy on the shelves,' said spokesman Mike Kinney. ``While we have not filled all orders to 100 percent, we have generally solid distribution.' Meanwhile, doubts about Hershey shipments could linger until the company begins operating a new 1.2-million-square-foot distribution center in the third quarter of 2000, analysts said. ``If they run into problems with the new distribution system, it'll mean a second year of difficulties and that would be more severe,' said Ghez. ``They know that, so I'm sure they'll be careful.' On Friday, Hershey stock was down 1/8 at 50-1/8 in New York Stock Exchange trading. biz.yahoo.com