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Non-Tech : Procter & Gamble (PG) -- Ignore unavailable to you. Want to Upgrade?

To: Patriarch who wrote (133)	3/13/2000 1:53:00 AM
From: Bud G	Respond to of 196

Thursday March 9, 9:00 am Eastern Time (Real news this time) Individual Investor Fund Managers Like P&G Despite Misstep Associate Editor: Len Hollie (3/9/00) Portfolio managers say they still like blue chip stalwart Procter & Gamble (NYSE: PG - news), which continued its slide Wednesday after shedding $40 billion in market cap Tuesday due to an unexpected earnings warning. But at least one manager has shed some of his holdings within last 30 days, and is questioning P&G's management tactics, while another is under-weighted in the stock relative to his benchmark. P&G ended Wednesday at $57.69 per share, down $3.31, after dropping to a new low of $57.13 per share in intraday trading. The stock's 52-week low is $57.25 per share. The company's stock plummeted Tuesday after P&G said it expected fiscal third-quarter earnings to be down 10% to 11% per share from the year-ago quarter, compared with its prior forecast for a rise of 7% to 9%. The fiscal quarter ends March 31. ``We see this as a one quarter problem, and historically, this has happened to P&G before,' says Tim Ghriskey, portfolio manager of the $2.7 billion Dreyfus Fund (NASDAQ: DREVX - news). ``P&G is a company that won't go away. It won 't make any dramatic changes, and revenue is still very good,' he says. However, Ghriskey says that P&G management may come under some criticism. ``Short-term, there are always questions about management accountability in situations like these,' says Ghriskey. ``Management said recently that there was no problem, and now there is a problem.' ``We don't know what happened, whether the company didn't hedge its commodity prices, or they rolled out of the hedge. But a number of companies hedge their commodity prices, and they have long-term contracts for their basic materials, such as packaging,`` says Ghriskey. 'Companies such as Colgate-Palmolive (NYSE: CL - news) said they haven't been impacted, and Unilever (NYSE: UN - news) says it hasn't been impacted.`` Ghriskey notes that commodity prices have been weighing on the consumer goods companies. He says he has pared his holdings in P&G stock in the last 30 days, but not due to the recent announcement. P&G blamed the projected earnings shortfall on high pulp and petroleum-based raw material costs, among other factors. Petroleum-based materials are used in cleaning supplies such as liquid laundry detergent as well as a number of personal care products. It is also used in the plastic packaging on a variety of consumer goods products. 'P&G got caught short by a confluence of occurrences. A number of commodity prices have spiked, they are undergoing a restructuring and they are in an increased competitive environment,`` says Ghriskey. He says P&G is now trading at about 17 times next year's earnings. 'P&G's top line is growing like it always has. We see this as a one-quarter problem. We expect them to bounce back in the calendar second quarter, and we think that for the full year, P&G will meet analysts' expectations and that they will rebound in spades,`` Ghriskey adds. But, Steven Ralston, investment manager for the $357 million BlackRock Balanced Fund (NASDAQ: PCBAX - news), and the $408 million BlackRock Large Cap Growth Fund (NASDAQ: PNGEX - news), says P&G's problem may linger a while longer. 'We see this event as a medium-term problem in the three to nine months range,`` says Ralston. 'P&G is a high quality company that has done very well for shareholders over the long term. But other consumer stocks with packaging costs have also been hurt, as have newspaper companies, due to higher resin prices, chemical companies, and of course airlines.`` Ralston says the funds' P&G positions are under-weighted relative to their benchmark, allowing them to gain ground on their bogie. He notes: 'Also, the collateral damage done to other stocks in the sector which we don't own gave us nearly a wash in the P&G slide.`` Bottom Line: Even though some fund managers still like the stock, questions remain about P&G management accountability, and about the duration of the earnings damage. For more in-house professional stock analysis and commentary, visit us at Individual Investor Online. More Quotes and News: BlackRock Funds Balanced Portfolio (Nasdaq:PCBAX - news) BlackRock Funds Large Capital Growth Equity Portfolio (Nasdaq:PNGEX - news) Colgate-Palmolive Co (NYSE:CL - news) Dreyfus Fund Inc (Nasdaq:DREVX - news) The Procter & Gamble Co (NYSE:PG - news) Unilever NV (NYSE:UN - news) Related News Categories: food/beverage, household/consumer Archive: Mutual Funds archive Copyright (C) 2000 Yahoo! All Rights Reserved. Privacy Policy - Terms of Service Copyright 2000 Individual Investor. All rights reserved.