Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : WILL COCA-COLA ALWAYS GO UP? -- Ignore unavailable to you. Want to Upgrade?

To: John O'Neill who wrote (1080)	6/3/1998 4:11:00 AM
From: BAXTERBOO	Read Replies (1) \| Respond to of 1462

John, Have u seen this? Dow Jones Newswires -- June 2, 1998 PepsiCo Inc. Files Suit To Terminate Large U.S. Bottler By Nikhil Deogun ATLANTA (Dow Jones)--PepsiCo Inc. (PEP) filed a lawsuit to cut off one of its largest independent bottlers, saying the franchisee threatened to intervene against Pepsi in its antitrust lawsuit against Coca-Cola Co. (KO) unless Pepsi agreed to certain demands. The move appears unprecedented, as Pepsi says it has never terminated a contract with a U.S. bottler, whose agreements with Pepsi carry on "in perpetuity" unless certain obligations aren't met. In a blistering letter to bottlers, Roger Enrico, PepsiCo's chairman and chief executive, characterized the demands by Central Investment Co., of Cincinnati, as "a way to force us to pay a stupendous ransom" and referred to the bottling company officials as "traitors." In an interview, Enrico said two top officials from Central Investment, including Chairman John F. "Bud" Koons, met with the PepsiCo chief on Monday and demanded that he sign an agreement within 24 hours giving Central Investment additional franchise territory, special concentrate prices and certain marketing funds - and that the agreement be kept confidential. If not, the bottler would side with Coke in Pepsi's recent lawsuit accusing Coke of attempting to "freeze" Pepsi out of selling beverages in restaurants and movie theaters that are supplied by independent food distributors. "The practical effect of their threatened intervention is to place them on the side of the Coca-Cola Company and against all of us," Enrico wrote in his letter. "In my book that makes them traitors to our system, and when you have a traitor in your camp the only choice you have is to get them out." P.S.....Yes KO is overvalued, its been said now for umpteen years, and anyalst will be right one of these years, but I happen to think now is not the time to short KO, summer months are known to be not a favorable time for techs, If I was to short it would have been 1-2 weeks after Labor day, this is when the rotation will start back to the Techland and out of the consumer area...good luck though. Also just imagine if some PEP bottlers line up against PEP, and take hold of KO, what kind of growth will KO have then.

To: John O'Neill who wrote (1080)	6/4/1998 11:11:00 AM
From: Dulane U. Ponder	Read Replies (1) \| Respond to of 1462

So John -- now we get to the real motive behind your short. "Pepsi tastes better." In the market and in the cola wars, psychology often has a big part. I guess you are just as committed to your Pepsi as I am to my coke. In any event, don't think coke is a great short unless you view it as shorting the market itself. We may get a significant correction if 2Q is a big disappointment in which case, you should make some money if you can wait a while to cover. Over the years, coke has been a terrific long position but I believe it will trade with the market but perhaps with a higher low. dp