Bed Bath & Beyond Earned 79 Cents a Share
Posted by Eddy Elfenbein on April 12th, 2007 at 8:28 am

The company just wrapped up its 15th straight record year. For the fourth quarter, Bed Bath & Beyond (BBBY) earned 79 cents a share, although that doesn’t include a charge of seven cents a share.
For the year, BBBY earned $2.15 a share, which is a nice improvement over the $1.92 a share it made last year. Annual sales rose from $5.8 billion to $6.6 billion.
Here are the quarterly results going back a few years:

Two things to note. This last quarter was based on 14 weeks while the other quarters were just 13 weeks. Also, the 2006 fiscal year had 53 weeks compared with 52 for last year.
Some analysts have noted the company’s lower gross margins. This is what BBBY had to say on their conference call:

The gross profit margin for the full fiscal year improved slightly from fiscal 2005. The approximate 110 basis point decline in the fiscal fourth quarter was primarily due to higher inventory acquisition costs. Inventory acquisition costs were higher, primarily due to a shift in purchase volume incentives earned during our fiscal third quarter, which as we discussed in December, benefited that quarter.

This is the first decline in gross margins in five years.

My Thoughts on Citi
Posted by Eddy Elfenbein on April 11th, 2007 at 1:15 pm

I have to add my thoughts about Citigroup (C). The company just announced plans to cut 17,000 jobs which is about 5% of the workforce. The Street, however, is unimpressed and the stock is down today.
Much of the blame is being aimed at CEO Chuck Prince, but I’m going to make a slight defense of Prince. Or rather, the problems at Citi aren’t his entirely his fault. The most important problem is that the company, as it’s currently comprised, doesn’t make any sense.
Shareholders are in denial and they’re blaming Prince for the effects of Citi’s problems, not the root. Here’s the deal: Sandy Weill built today’s Citigroup through very aggressive acquisitions. The idea was to throw a bunch of mediocre businesses together and that would (hopefully) make one really good company. Well, it doesn’t.
Today, the company has nearly $2 trillion in assets and what do they have to show for it? A P/E ratio of 12. It’s the Austria-Hungry of stocks.
I’ll give you a good example. Look at the major brokerage stocks. Merrill, Goldman, Morgan, Lehman, have all seen their stocks soar. But Citi’s stock has done nothing. Does anyone think that an independent Salomon Smith Barney wouldn’t have rallied? Maybe it wouldn’t have, but it would have taken some effort. Now, we’ll never know.
Prince may be out the door soon. Next up will probably be Sallie Krawcheck (oh, how the media will love that!). But I think the CEO turnstile will continue to spin until someone finally decides to un group Citi.

Minyanville Gets Animated
Posted by Eddy Elfenbein on April 11th, 2007 at 11:03 am

Citigroup Settles With Thomson
Posted by Eddy Elfenbein on April 11th, 2007 at 10:54 am

The Financial Times reports:

Citigroup has agreed severance terms with Todd Thomson, who was sacked as head of its wealth management arm in January, as the group prepares to announce a shake-up plan involving the loss of more than 15,000 jobs.
The agreement follows weeks of tough negotiations over the size of Mr Thomson’s settlement and restrictions on poaching staff.
Mr Thomson said he was sacked without cause and the company has never publicly suggested otherwise. However, people familar with the situation said he was sacked partly for conspicuous spending including corporate sponsorship of events involving Maria Bartiromo, the CNBC correspondent.
One person familiar with Citigroup’s negotiation said Mr Thomson “was paid for the time he worked for the company.”
Mr Thomson, who previously served as Citigroup’s chief financial officer and was once seen as a potential successor to Mr Prince, said on Tuesday night: “I am very pleased with the settlement, happy to close this chapter, and excited to move on to some new opportunities.” Mr Thomson has set up an investment vehicle and has also received a number of approaches from other companies. Most of these have been from private equity firms, either to run portfolio companies or to join as a partner.

I was really hoping for the headline, “Thomson Looking for New Partner,” but no such luck.

The Latest Housing Boom
Posted by Eddy Elfenbein on April 11th, 2007 at 10:22 am

Would you believe it’s in Northern Ireland?

The average cost of a home rose 37 percent last year to 195,751 pounds ($383,183), according to the University of Ulster. That’s at least 5 percent more than the U.K. national average and nine times the gross local average salary. Only London and southern England are more expensive.
House prices in Northern Ireland have quadrupled since 1994 after tracking consumer prices during the previous decade, said Alistair Adair, a professor at the University of Ulster.

Sin Stocks Do Better
Posted by Eddy Elfenbein on April 11th, 2007 at 10:12 am

Personally, I don’t see anything morally wrong with drinking, gambling or smoking, but much of society seems to frown on this. Since the beginning of the year, it’s been illegal to smoke in bars and restaurants in Washington. Now there’s some academic evidence that shows that “sin stocks” are pretty savvy investments.

”While sinful stocks aren’t necessarily good for the soul, they do deliver higher returns,” said Marcin Kacperczyk, a professor at the Sauder School of Business at UBC. “There is a societal norm against funding operations that promote human vice and that some investors, particularly institutions subject to public scrutiny and social norms, pay a financial price for not holding these stocks,” the study said on Tuesday.
Sin stocks out perform their comparables by about 30 basis points a month, the study found. And they come cheap — the market-to-book ratios of sin stocks were on average about 15% lower than those of other companies between 1965 and 2004.

Here’s the paper.

Danaher’s CEO Rakes In $46 Million
Posted by Eddy Elfenbein on April 11th, 2007 at 9:42 am

The Washington Post reports that H. Lawrence Culp Jr., Danaher’s CEO, made $46.2 million last year. Interestingly, this is in the ballpark of what Lloyd Blankfein and Stanley O’Neal made, but because Danaher tends to stay out of the spotlight, Culp’s pay isn’t attracting much attention. (Plus, the firm is based on Congress’ home turf.)
Like many executive pay packages, most of Culp’s pay is in the form of stock options. The Post notes that at the stock’s present value, Culp’s options are worth more than $100 million. Of course, let’s look at the results:

Last year, Danaher’s profit rose 25 percent, to $1.1 billion from $898 million in 2005. Revenue grew 20 percent to $9.6 billion. Culp said recently that his goal is to reach $25 billion in sales by 2012.
Since taking over in May 2001, Culp has bought more than 30 companies and doubled Danaher’s market value. His purchases, which include dental products company Sybron Dental Specialties for about $2 billion, have expanded Danaher’s presence in the medical and dental industries.

No one is complaining about his pay, and no one should.

Shareholders Fight Back
Posted by Eddy Elfenbein on April 11th, 2007 at 9:38 am

The private equity buyout of Clear Channel (CCU) isn’t going as smoothly as planned, and I’m happy about it. I don’t have a personal stake either way, but I’m glad to see shareholder activism, even in the form of large mutual funds, have an effect on buyouts.
The Wall Street Journal reports that two of CCU’s largest shareholders, Fidelity Investments and Highfields Capital, aren’t pleased with the private equity offer of $37.60 a share. The deal on the table will be funded with $23 billion of debt.
The private equity group, which is being led by Thomas H. Lee Partners and Bain Capital, may have to raise the bid to $40 a share in order to win two-thirds of the shareholders’ votes.
This is good news because if this deal gets blocked, it will reverberate across Wall Street and many potential deals will be scrapped. Put yourself in the shoes of a member of a private equity syndicate; you want as little trouble as possible. The theoretical benefit of going private is that you don’t have to deal with shareholders, but now you’re in the midst of a big proxy battle. Who needs that? Even if you win, you may have to raise your bid.
The reason the private equity deals have come is because they think it’s worth the effort. If shareholders are smart, they can change that.

The Hedge Fund Wives
Posted by Eddy Elfenbein on April 10th, 2007 at 1:23 pm

Haven’t you always wondered about the wives and girlfriends of hedge fund managers? Gee, I know I have. Forunately, we have New York, the magazine, to fill us in:

2. Anne Dias Griffin
36, wife of Kenneth Griffin
French-born Dias Griffin graduated summa cum laude from Harvard Business, and cut her teeth at Goldman Sachs in London before founding the $55 million Chicago-based Aragon Global Management, one of the largest hedge funds managed by a woman. She and her husband gave $19 million to the Art Institute of Chicago—the site of one of their first dates—for a modern-art wing designed by Renzo Piano.

The FT’s Alphaville says that this comes “close to the boundaries of good taste.” Well, it’s not like they listed the boyfriends of top hedgettes.

NASDAQ lists most IPOs since 2000
Posted by Eddy Elfenbein on April 10th, 2007 at 1:17 pm

Interesting:

The Nasdaq Stock Market, Inc. listed 42 initial public offerings in the first quarter, including National CineMedia Inc., the largest year-to-date U.S. IPO.
NASDAQ recorded its strongest first-quarter performance for IPO listings since the beginning of 2000, the New York-based exchanged announced yesterday.
In total, NASDAQ captured 73 new listings in the first quarter.