Kraft Foods Inc. created a buzz by announcing that it is moving its stock next week from the New York Stock Exchange to the Nasdaq Global Select Market, becoming the largest company ever to switch exchanges, according to news reports.
The move is being seen as a big public relations win for Nasdaq following its botched execution of Facebook Inc.’s initial public offering last month. Kraft’s move demonstrates confidence that Nasdaq has everything under control.
For Kraft, the move “will yield greater cost efficiencies, while providing visibility advantages for the company’s iconic brands,” it said.
For shareholders, the move probably won’t have much significance. In this day and age, when we look up stock information on a computer instead of poring over the listings in a newspaper, most shareholders don’t care what exchange trades their stock.
Instead, Kraft shareholders have something much more important to think about: the pending split of the global food giant into two companies.
In August 2011, Kraft announced its plan to split in two, a complicated transaction that it expects to complete before the end of 2012.
Under the plan, the company’s North American grocery business will be spun off into a new company called Kraft Foods Group Inc.
That business manufactures a number of food and beverage products, including Maxwell House coffee, Oscar Mayer meats and Kraft cheeses, dinners and dressings.
Of course, Maxwell House is the most significant brand for Jacksonville with its iconic Downtown coffee plant that employs 235 people.
The rest of Kraft’s current business is referred to as global snacks, which will become a company renamed Mondelez International Inc.
A company news release in March explained that “Monde” is derived from the Latin word for world and “delez” is a “fanciful expression of delicious.”
“Mondelez (pronounced ‘mohn-dah-LEEZ’) is a newly coined word that evokes the idea of a delicious world,” said the news release.
OK. It all kind of reminds me of the contrived names of Jacksonville businesses in the past such as Modis, which the company described as a play on the Latin word “modus,” which means method, combined with the initials “i” and “s” which stood for information systems.
Before that, there was Ideon, which was a combination of the words “ideas” and “eons.” That company did not last all that long.
Shareholders of Kraft are not required to vote on the spinoff plan but more than 90 percent did vote to approve the name Mondelez at last month’s annual meeting.
Forgetting about the name, the snacks company will be a powerhouse that includes brands such as Cadbury, Nabisco and Oreo.
Kraft produced a total revenue of $54.4 billion last year. The company has said in Securities and Exchange Commission filings for the spinoff that the businesses of Kraft Foods Group had revenue of $18.7 billion last year.
The Kraft Foods Group businesses produced revenue of about $4.6 billion and earnings of $478 million in the first quarter this year.
In filings for Kraft Foods Group, the company said the spinoff will allow the two new companies to focus on their distinct businesses.
Obviously, with Kraft’s move to Nasdaq next week, the plan is for both new companies to also trade on Nasdaq.
Kraft Foods Group will trade under the ticker “KRFT” and Mondelez will trade under “MDLZ.” For the time being, Kraft Foods Inc. will continue to trade under its “KFT” symbol until the spinoff is complete.
EverBank leads the IPO market
Returning to Facebook’s debacle, Renaissance Capital, a Greenwich, Conn., company that tracks IPO data, said that the social media company’s disappointing public offering was part of an overall bad month for IPOs.
Renaissance said in a report that other IPOs in May, besides Facebook, produced an overall “abysmal” negative 6 percent return in the aftermarket for the month, despite the fact that 36 percent of those IPOs were priced below their intended range.
Renaissance said only one of May’s IPOs produced a positive return in the aftermarket and that was — you guessed it — Jacksonville-based But EverBank Financial Corp.
EverBank’s IPO was priced at $10 a share, below its hoped-for range of $12-$14. EverBank has been trading above the IPO price ever since the stock began trading on May 3, finishing May at $11.12.
The stock has been trading close to the $11 level this month.
Better news for LPS
Two weeks after he lowered his earnings forecast for Lender Processing Services Inc., D.A. Davidson analyst John Kraft said a better outlook for mortgage originations has the situation looking up.
Jacksonville-based LPS provides technology services for mortgage lenders through all phases of a loan, from origination through default if the loan enters foreclosure.
On June 1, Kraft lowered his earnings forecast for LPS because of lower-than-expected revenue from its default services business.
“Despite periodic fits and starts, we continue to be uninspired by the industry’s overall progress in processing the massive delinquency backlog,” Kraft said in that report.
In a follow-up report last week, Kraft said a Mortgage Bankers Association report shows “borrowers are taking advantage of historically low interest rates to both purchase and refinance their homes in numbers reaching three-year highs. “
“This pickup in refinancing activity is a nice offset to the stubbornly lower foreclosure volume,” he said, but he expects foreclosure activity to increase at some point because of high default rates.
“This massive pipeline of delinquent loans should flow down to LPS eventually. In the meantime, the refinancing growth should help fill the timing gap,” he said.
No revenue for Solar Energy Initiatives
Solar energy stocks were in the news last week, which reminded me to check on Solar Energy Initiatives Inc., a company that abandoned its Ponte Vedra Beach headquarters office last year.
Solar Energy’s latest quarterly report filed with the SEC shows that it recorded no revenue for the nine-month period ended April 30, after reporting a total of about $1.3 million in revenue the previous fiscal year.
The quarterly report says the company’s business “is to market and sell solar power projects and services” and that it “continues to pursue its business model.”
Solar Energy Initiatives said in SEC filings last year that it had moved to the company’s facility in Kingstree, S.C. However, its latest filings list its address in Cary, N.C.
Solar energy stocks received a lift last week when Arizona-based First Solar Inc., which Bloomberg News says is the world’s largest maker of thin-film solar panels, announced it would delay closing a plant in Germany because of strong demand in Europe.
In addition to that, a quarterly report by the Solar Energy Industries Association and GTM Research said that the volume of solar panel installations in the U.S. grew by 85 percent in the first quarter.
Florida ranked 14th in first-quarter solar installations, it said. New Jersey ranked first.
International Baler reports improved results
International Baler Corp. last week reported sales in the second quarter ended April 30 rose 63 percent to $4.6 million and earnings rose 68 percent to $399,009, or 8 cents per share.
The Jacksonville maker of baling equipment said in its quarterly SEC report that the increased sales resulted from higher shipments of synthetic rubber balers in the quarter.
International Baler also said it expanded its dealer network, giving it wider market coverage.
ParkerVision exec receive new 3-year contract
We don’t know when or if ParkerVision Inc. will cash in on its wireless radio technology, but the company’s top executives are planning to stick around for a while.
The Jacksonville-based company said in an SEC filing that its top officers all signed new three-year employment agreements after their previous contracts expired June 6.
The agreements covered Chairman and CEO Jeffrey Parker, Chief Financial Officer Cynthia Poehlman, Chief Technical Officer David Sorrells and Executive President of Corporate Strategy and Business Development John Stuckey.
356-2466