These three companies just didn't live up to Mr. Market's expectations last week. Whether the target was set by the company's own management, by Wall Street analysts, or by the market at large, that miss can have serious consequences, and share prices can take a serious slide as a result.
Sometimes an earnings stumble is a signal to sell, but digging in the dirt is also a good way to find turnaround candidates while they're getting beaten down. Today, the soda has gone flat, fiber's gone dark, and the office is empty. It's not vacation season yet, is it?
More pop, less fizz
First up is premium soda-pop maker Jones Soda
Management said that the net take came in low because of a substantial increase in sales and marketing staff, all in order to support the company's rapid growth. So if that's the story, why the tepid revenue increase?
Well, case volume did grow an impressive amount at retailers like Wal-Mart
That might change a bit in the future, as management said they have negotiated direct distribution deals with some of the new retailing partners, meant to bring those sweet, sweet bottles into stores. That hasn't quite kicked in yet, though, so we're playing the waiting game.
Playing catch ... up!
The next Wall Street jaywalker is JDS Uniphase
Revenue came in a bit higher than anticipated, partly because of a smaller-than-expected seasonal decline. However, that's nothing to get excited about, as management indicated that they have a poor outlook on the communications segment from top carriers slowing down in their order requests.
While the company has faced a long streak of negative cash flow up until this quarter and the balance sheet carries a heavy debt load, a quick look at the Motley Fool CAPS community offers a more bullish attitude.
Reshape, restructure, rebound?
Let's finish up with another also-ran. OfficeMax
A newly restructured direct-sales force couldn't keep up the sales to corporations, and the $0.77 of profits per share delivered fell far short of the $0.93 analyst expectations. Dropping mail-in rebates in exchange for instant rebates hasn't exactly inspired flocks of new customers to raid the stores, as same-store sales only grew 2% -- and that's being generous, using an adjusted figure for the promotion. Without the new incentive, growth in stores open at least a year would have been a measly 0.5%.
Total revenue has decreased steadily for more than two years, and while the operational efficiency has improved, the long string of shakeups and fix-me-now programs has undermined the company's credibility a bit. You know where the proof is supposed to be, so I'm still waiting for OfficeMax to serve up a bowl of tapioca or some pumpkin custard someday.
Some of these underperformers are victims of larger circumstances, while others might have only themselves to blame. It's up to you to decide which down-on-their-luck companies should be able to pull themselves up by the bootstraps, and which really are stuck in the mud. Come back next week, and we'll take a look at another batch of mishaps and disappointments. It'll be fun and educational.
Further Foolish reading:
- Flat Soda
- JDSU Goes Through With Reverse Split
- The Dust Settles at OfficeMax
- Take cheap when you can get it.
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Fool contributor Anders Bylund holds no position in the companies discussed this week, but he did complete a Cisco boot camp eight years ago. The Fool has a disclosure policy, and you can see his current holdings for yourself.