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Open Letter To Green Mountain
Below, ZH friend LongShortTrader submits his letter to the Green Mountain (GMCR) board of directors. In it, he expresses concern over various statements that former Chairman Robert Stiller, current CEO Larry Blanford, current CFO Frances Rathke, and others have made recently. Hey: if the Dan Loebs of the world can have a daily activist pulpit, who not others who, unlike the broader lemming herd, actually do their homework?
From the 25 page grievance:
I am writing to you to express concern over various statements your former Chairman Robert Stiller, current CEO Larry Blanford, current CFO Frances Rathke, and others have made recently. I’ve been tempted to buy your stock, as it appears to be cheap, but I frankly cannot get myself to do so. Here’s why: I don’t trust you, I don’t trust your management team, and I don’t trust your reported numbers. I wanted to give GMCR a chance, but Stiller, Blanford, Rathke, and others’ recent public statements leads me to the belief that something is very wrong with your company. I fear the worst is yet to come.
See, the problem is, I don’t think it’s just me; I think the market’s reaction since last Wednesday’s earnings conference call suggests others do not trust you as well. Your stock is down, not because of short?sellers, but because market participants are collectively trying to price in a ‘dishonesty discount’.
A word of advice: If you care about the long?term value of your stock and your reputation, come clean as soon as possible. It’s better late than never.
More in the full letter (pdf)
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Roasted.
I really liked "Good to the last drop" Can't take credit for it though.
Their k-cup patents expire in September, but it's not necessarily a death knell as their patent on the machines themselves are much longer, and they can increase the machine price to make it a profit center in the face of declining k-cup prices. They are also pushing their new cups, which I don't personally see the value in getting locked into, but apparently they are moving units at a reasonable clip.
However this is all overshadowed by the points LST has brought up. GMCR is at risk of pulling a NetFlix here and destroying their reputation needlessly. They have products that are highly regarded in the market place, and they will be able to compete even after the patent expiry in September. But headed into that critical time frame is when they need maximum stability, transparency, and accountability to solidify confidence in their business model. This sort of fuzzy reporting and insider trading nonsense is really undermining their credibility. They can turn this around if they act decisively, but then again if they really understand that, they probably wouldn't gotten this far into the weeds to begin with.
I disagree with you. I have a GMCR coffee maker (a Keurig). It's good, but it's already expensive at about $180. If it had cost significantly more, I would not have bought it, and if they raise the price significantly they will lose a lot of sales from folks like me who don't have one yet. Even if they keep the prices the same, am I going to buy a new machine to use their new cups? NO. So I think they are going to lose a LOT of revenue from the consumer market.
Now, on the other side of the coin, my OFFICE has a few Keurig machines, too. Those will still be used, and the office might be persuaded into buying the new machines. So maybe that market will still be profitable for GMCR. But I think this company is toast.
You could be right, but the $180 model is one of the pricier household versions from what I recall, I think if they were designing the machines for margin they could make some smaller and cheaper units that have a better profit margin on them. Also keep in mind the people purchasing Keurig machines are already fine with shelling out .50+ cents per cup of coffee versus much lower cost for a traditional drip system, so I think there will be an increased tolerance on the price front. Afterall, $200 is only 50 cups of $4 coffee at Starbucks!
Cream with that
Tough titty, they got theirs.
Next up is to renounce their citizenship and move to Singapore so they won't pay capital gains on their stock options.
+1000, LST. I salute you.
As a Seattle dweller, I feel their pain. We got Schultz - ed here as well. Little rat bastard sold our basketball team to some Okies. Never ever count on the other guy to play fair when it comes to business and profits. " He who do deal, then bend over without plywood in pants, get fucked in the end " Confucius say. Ha ha ha.
On the other hand, this guy is Schultz - ing himself. Taking the first pot of coffee off the burner, monetarily speaking, and leaving the watered down grounds for the rest to the shareholders to re- run if they want a cup a cash. Dirtbag.
Yes we need a Sinagpore thread.......you can´t spit there I know....
sold a lot since the drop
my guess they're getting while the getting can still be got...at any price
I think you have to be approved by whoever to renounce your citizenship....you can´t just do it...and California is just chomping at the bit for those taxes....actually they have already spent them....now if they did this 20 years ago and moved the company that is one thing...but you can bet the Governments have already spent those capital gains...lol
Is this the Friday humor post????
Look at the bright side. GMCR provided several great trading opportunities within a couple of yrs. I made excellent profits on those trades about 90% of the time. I would like to thank the CEO for his performance. Bravo!
Their customer base consists of people who are either too lazy or too stupid to make a real cup of coffee.
Who's next?
Soda Stream?
Chipotle?
Zuckerberg?
Please; don't tell me Vermont is not utipia.
PWND ...... definitely worth taking time to read the whole thing.
Wouldn't be surprised to see these "Fraud Mountain Coffee Jokers" appear in orange jumpsuits...
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