American Greetings (NYSE:AM), one of the largest greeting-card companies, needs a really good Happy Birthday card. I mean really good, because its latest results won't cheer up shareholders anytime soon. As the company celebrates its 100th year in business, I suspect shareholders are looking less for the birthday cake and more for the spiked punch.

In American Greeting's fiscal Q1 2007, sales declined to 7.5% year over year, to $406 million, and net income fell 42% over the same time frame to $15 million. Can we say "Holy fixed costs, Batman?" Then again, the company's sales have been in decline one way or another since 1999, when they peaked at $2.2 billion. Net income hasn't been so lucky, considering that it was $190 million in 1997, and analysts are expecting less than $60 million for FY 2007.

You know it's a sad quarter when management spends two-thirds of the press release discussing the refinancing of its debt. For one thing, the company issued $200 million in 10-year bonds at 7.375%, to retire 92% of its debt at 6.1%, which was due in 2008. The company also plans to use $160 million in cash to retire some convertible debt, which would save it from diluting shareholders by issuing stock. Neither move would excite me as a shareholder, especially given the remaining $240 million of long-term debt on the balance sheet.

This brings me to the questionable part of the release: the share buyback. It just seems out-of-touch when the company's core business is clearly struggling. Granted, American Greetings is returning capital to shareholders rather than invest it in a horrendous business. However, with a share price that is only 20% off its recent high, it's a bit disingenuous to use the purchase of more than $100 million in stock this calendar year to "grow long-term earnings per share," as the company said. In reality, the buyback is only softening American Greetings' earnings comparison with its prior year, making its decline look less precipitous.

Investors would do well to avoid this company, instead investing their hard-earned dollars in better consumer-oriented companies like Wal-Mart (NYSE:WMT) or even Johnson and Johnson (NYSE:JNJ). Both are trading at lower P/E-to-growth ratios than American Greetings, with much more success in growing their businesses. Greeting cards won't be printing shareholder-happy refrains any time soon.

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