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After the bell: Coke fizzles
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March 29, 1999: 6:37 p.m. ET
Soft drink giant to see sharp drop in worldwide sales; HMT, Huffy warn
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NEW YORK (CNNfn) - Whatever momentum was generated by the Dow vaulting the elusive 10,000 mark Monday was stunted quickly by several ominous after hours reports, including one from Coca-Cola warning of lower first quarter sales overseas.
The Atlanta-based soft drink giant said its worldwide sales will drop up to 2 percent during the first quarter due to reduced demand in Latin America and Europe, where overall case sales reductions could reach 5 percent.
That compares to a 14 percent increase in unit case volume worldwide during the first quarter last year, including a 19 percent gain in Latin America and a 16 percent gain in Europe.
Coca-Cola Co. (KO) officials blamed the decrease on "the continued difficult economic environments that currently exist throughout the world," particularly in Germany, Japan, South Africa, southeast Asia and parts of eastern Europe.
But the company is projecting sales in both the United States and its North American Group to increase only by about 2 percent each. That compares to an increase of 5 percent and 6 percent, respectively, during the comparable quarter last year.
"The market in the United States is highly competitive and, at the end of the day, a lot of our bottlers have taken some price increases retroactive to the beginning of the year," company spokesman Robert Baskin said of the lagging U.S. sales.
As for overseas sales, Coca Cola has not reduced its marketing efforts, but has "redeployed" some marketing resources to try to stimulate new sales, Baskin said. He said the company's long-term overall volume goal of 7 percent to 8 percent remains in place, but admitted hitting that goal is now a "more challenging task."
Baskin said the company is not yet prepared to comment on first quarter earnings, which are due out the third week of April. Coca-Cola shares dropped in after-hours trading on Monday on Instinet to 64-13/16, after closing up 1-7/8 to 67-3/16 on the New York Stock Exchange.
The list goes on ...
Expectations were not running much higher among other firms.
HMT Technology Corp. (HMTT) said it projects fourth quarter revenues ended March 31 to fall 15 percent to 20 percent below its third quarter total of $69.8 million.
Company officials said that will cause HMT to lose money during the quarter, but projected it should be able to generate positive cash flow for the quarter. Analysts had projected a net gain of 7 cents per share for the quarter.
Likewise, Huffy Corp. (HUF) lowered its first quarter earnings estimate Monday, noting it will fall short of the 30 cents per share earned a year earlier.
The Dayton, Ohio-based bicycle manufacturer said it now expects to earn between 8 cents and 12 cents per share before reconfiguration charges associated with Huffy Bicycle Co. The company blamed soft sales and higher labor costs for the earnings drop.
Planet Hollywood (PHL) reported a net loss of $228.2 million, or $2.09 per share, including a one-time charge for the quarter ended Dec. 27 after watching net sales fall to $75.1 million from a year earlier.
Company officials also said they were in negotiations with several investors about reworking its debts. The Orlando-based restaurant chain does not expect to make a scheduled $15 million interest payment due on April 1 for its 12 percent senior subordinated notes.
On a more positive note, Priceline.com said Monday it had priced 10 million shares at $16 for its initial public offering, above the $12-to-$14 a share range that was originally projected.
-- from staff and wire reports
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