Starbucks goes back to the future
I haven't been inside a Starbucks
Since Howard Schultz has returned to the helm of the company he founded, Starbucks has launched several customer-friendly moves like this one. Whether it's abandoning plans for oven-prepared eats that filled its aromatic stores with the iffy scents of breakfast sandwiches, or simply publicizing the availability of smaller, cheaper cups of coffee, Starbucks is changing back into the cozy place it used to be.
That's great for me as a consumer, but shareholders need to be careful about getting what they wish for. What will happen to profits and margins if consumers gravitate to cheaper brews, park themselves in crowded shops for free Web access, and go somewhere else for heartier sustenance?
Starbucks may be setting itself up to roll back store-level productivity, too. However, the chain had to do something. Consumers were starting to tire of Starbucks, as its same-store sales trends demonstrated. Let's just hope that Starbucks is taking a step backward today, only to take two steps forward later.
Briefly in the news
Let's take a quick look at some of the other stories from the week:
topped analyst expectations, as it has in eight of its first 10 quarters as a public company. China's leading search engine had its challenges leading up to the report. From snowstorm outages last month throughout China, to weakness in recent quarterly reports from stateside portals like Google (Nasdaq: BIDU) , Baidu was tested. It passed, though investors will want to be cautious about the company's spending patterns as it expands in Japan this year. (Nasdaq: GOOG)
finally told Microsoft (Nasdaq: YHOO) that it won't accept Mr. Softy's $31 per-share bid, because it severely undervalues the struggling search giant. Maybe Yahoo! should spend less time seeing itself through a funhouse mirror. The Microsoft offer was very generous, no matter what metric you prefer to use. At the very least, it will be tough for anyone else to top it. Is Mr. Softy dumb enough to outbid itself? If so, maybe its own vision is a bit distorted, too. (Nasdaq: MSFT)
- We took a look at several hot investments for Valentine's Day. Who needs flowers that die or chocolates that fatten? Nothing says "I love you" like capital appreciation in stock picks.
- In a move to appease angry sellers, eBay
announced slightly lower insertion fees for bargain-priced media items. Wait a minute! I didn't even know that eBay knew where the "lower rates" button was. (Nasdaq: EBAY)
Until next week, I remain,
Starbucks and eBay are Stock Advisor recommendations; Yahoo! is a former recommendation of that newsletter. Microsoft is an Inside Value selection and Baidu is a Rule Breakers pick. If you're hungry for stock picks, snag a 30-day trial to any of these services.
Longtime Fool contributor Rick Munarriz recommends windshield-wiper fluid when trying to look back. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the stocks in this story. The Fool has a disclosure policy.