Jones Soda shares drop Friday after company reports 1Q loss

Shares of premium soda maker Jones Soda Co. dropped Friday after the company said it swung to a loss in its first quarter, disappointing investors and analysts who expected better results.

Shares fell 33 cents, or 9.6 percent, to $3.12 in midday trading.

After the market closed Thursday, Jones Soda reported a loss of $3.9 million, or 15 cents per share, compared with a profit of $58,312, or less than 1 cent per share, in the prior-year quarter.

Analysts polled by Thomson Financial expected a loss of 4 cents per share.

Revenue grew 2 percent to $9.4 million from $9.2 million in the first quarter of 2007. Analysts predicted revenue of $9.5 million.

Jones Soda said it boosted its spending for new market promotions and advertising, which could hurt its near-term results but may help it grow in the future.

Merriman Curhan Ford analyst Robert D. Straus said in a note to investors said the company's sales this year will be monitored closely to see if the promotional spending has paid off.

He said that although the company is projecting it will report a profit in 2009, "we wait on the sidelines for more evidence."

Investors have already been waiting for over a year to see the benefits of the company's switch to cans _ a move that was expected to increase profits and sales. Previously, it sold its sodas exclusively in glass bottles, and fewer retailers were willing to stock them. With the addition of cans, the company added a number of big retailers to its list of sellers, including Wal-Mart.

At the same time, Jones switched to using pure cane sugar to sweeten its drinks rather than high fructose corn syrup. Both the can launch and the switch to cane sugar have been plagued with delays.

Piper Jaffray analyst Nicole Miller Regan downgraded the shares to "Sell" from "Neutral," citing a lack of "near term profitability" in a client note.