land of odd
High commodity prices. Weak consumer spending. And heavy borrowing.
If the recent problems of Domino’s Pizza sound a lot like the issues hanging over the broader American economy, it’s no coincidence. With its dependence on consumers, its sensitivity to the run-up in dairy and wheat prices and a risky decision last year to double its debt in order to pay a huge one-time dividend, the pizza chain’s recent troubles speak volumes about the challenges facing both companies and consumers in the year ahead.
But Domino’s trajectory isn’t just another tale of economic gloom and doom. It’s also a story of how large investors — including none other than Michael S. Dell — have kept the faith in the sliding shares of Domino’s, much as they have stuck with the overall stock market despite earnings worries and other fears.
The battle over Domino’s encapsulates the uncertainty facing Wall Street in 2008, with money managers remaining bullish even as veteran strategists like Byron Wien of Pequot Capital Management forecast a recession and a 10 percent drop for the Standard & Poor’s 500-stock index.
So far, at least in the case of Domino’s, the pessimists have the upper hand. Domino’s shares closed Friday at $11.72, down from $20 last summer. And on the first trading day of 2008, Joe Buckley, a Bear Stearns analyst, cut his rating on the entire restaurant group, warning that the combination of higher food and labor costs and slow growth equals a “perfect storm” for the sector.
Mr. Buckley was prescient in getting the Domino’s story right, warning in April that sales could be weaker than Wall Street expected. Since then, he adds, its archrival Pizza Hut has outmaneuvered Domino’s, in part by doing a better job of hedging against soaring prices for cheese, which jumped 42 percent last year.
But there are signs Domino’s is learning how to handle those high commodity prices, Mr. Buckley says. A new contract with cheese suppliers and the ability to more quickly pass on high wheat costs to franchisees might help earnings improve later this year, he says.
With oil hitting $100 a barrel for the first time last week, the ability to manage high commodity prices is a skill other companies will have to master this year.
The parallels with the broader United States economy do not end there. Like more traditional giants, including General Electric and Boeing, one of the few bright spots for Domino’s lately has been international growth. The chain sells distinctly local offerings like the Peppy Paneer in India and the Savoyarde in France, which features potatoes, bacon and crème fraîche.
And, like the broader market — which trades at 14 times 2008 earnings — Domino’s stock is reasonably priced, selling for about 11 times earnings. That is a crucial reason institutional investors do not seem dissuaded by negative news.
In November, the firm that manages the fortune of Mr. Dell and his family, MSD Capital, disclosed that it had acquired a 5.1 percent stake in Domino’s. Mr. Dell’s firm has been an investor for some time, said Lynn M. Liddle, a spokeswoman for Domino’s, but this was the first time its stake rose above 5 percent.
Mr. Dell’s role is hands-off, Ms. Liddle says. “Does Michael Dell come and make pizza? No. I don’t think he speaks to us. His folks do.”
MSD CAPITAL declined to comment on its stake in Domino’s, as did Mr. Dell. But another major holder, Andy Brown of Cedar Rock Capital, remains bullish on Domino’s despite obvious problems like higher commodity prices.
“We cherish a business like this as long-term investors,” says Mr. Brown, whose firm manages about $5 billion and holds a roughly 8 percent stake in Domino’s. He says he still supports Domino’s decision to borrow nearly $1 billion to pay out a special dividend of $13.50 a share last spring, despite the decline that followed.
“I’m not happy about commodity prices, but we’re happy with how Domino’s returned capital to their shareholders,” he said.
Via NYTimes.Com
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Land of Odd: Chicago Cop Plans to Swim Lake Michigan Shoreline
land of odd
A Chicago police officer hopes to swim the perimeter of Lake Michigan this summer, traveling a total distance of more than 1,000 miles.
Nial Funchion says he expects to swim about ten miles a day -- departing from Chicago's North Avenue Beach in early June. At that pace, it'll take him more than three months to complete the trip.
Funchion says he wants the swim to inspire others to follow their own dreams.
The 41-year-old endurance athlete previously swam the English Channel and crossed Lake Michigan.
Funchion will be accompanied by a support team and hopes to finish in September.
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Land of Odd: Single Mom Duped by Fake Lottery Ticket
land of odd
NAPLES, Fla. — When single mother Mary Ann Shaffer scratched a lottery ticket last week, she thought Christmas had come early.
The ticket indicated she was a $25,000 winner.
"I said, 'Oh my God, it's a miracle," Shaffer told the Naples Daily News.
She looked on the back to find a telephone number to claim her winnings.
Elation quickly turned to sadness as she realized the ticket, given to her by a customer at her concession stand, was fake.
"Claim forms supplied by Santa Claus. All winning tickets must be validated by the tooth fairy and conform to her game rules ... All winners are losers and must have an excellent sense of humor," the ticket read.
"How can anyone be so mean around Christmas time?" said Bear Terstegge, a Naples Beach Patrol officer who examined the ticket.
Word about the fake ticket spread quickly around the Naples pier where Shaffer sells hot dogs and water.
"It touched everybody's heart," Terstegge said.
In the past few days, Shaffer, who has two young children, has received cards, gift certificates and hefty tips. One regular brought presents for her kids.
And she's even received a few lottery tickets - real ones.
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Land of Odd: Viking Behind Bars
land of odd
SALT LAKE CITY — An inmate is suing the Utah Department of Corrections for denying him his right to practice an ancient Nordic religion while behind bars.
Michael Polk is serving time for aggravated assault and robbery. He filed a lawsuit against corrections officials in federal court, accusing them of denying him religious items that he says are necessary to practice the Asatru religion.
The religion worships ancient Nordic gods like Odin, Thor, Tyr and Heimdal.
In the lawsuit, Polk says he has been a member of the Asatru faith since 2005, and in order to properly practice it he needs items including: a Thor's Hammer, a prayer cloth, a Mead Horn used for drinking Wassail, a drum made of wood and boar skin, a rune staff and a sword.
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Land of Odd: Strangest Business Stories of 2007
land of odd
1. Leona Helmsley and her dog
Don't laugh - if she were your master, you'd need a lifetime supply of Prozac too
Upon her death, Leona Helmsley leaves $12 million to her white Maltese, Trouble. And the poor pooch now receives death threats.
2. High-tech toilet disaster
Japanese manufacturer Toto apologizes to customers and offers free repairs for 180,000 high-tech toilets - thrones that feature heated seats, air purifiers, blow dryers, and water sprayers - after at least three catch fire. "Fortunately nobody was using the toilets when the fire broke out," says a company spokesman. "The fire would have been just under your buttocks."
3. Help the fat - give them food
Disneyland announces plans to close the "It's a Small World" attraction to deepen its water channel after the ride's boats start getting stuck under loads of heavy passengers. Employees ask larger passengers to disembark - and compensate them with guess what - coupons for free food.e
4. Microsoft's PR Firm Fiasco
While working on an article about Microsoft, Wired contributing editor (and former Fortune writer) Fred Vogelstein receives a 13-page dossier about himself, describing him as "tricky" and his stories as "sensational." The document, prepared by the company's public relations firm, Waggener Edstrom Worldwide, as background for Microsoft executives, was sent inadvertently to the writer.
5. Drink With The Dumb Name
After receiving a warning from the FDA, Redux Beverages agrees to stop calling its energy drink Cocaine. It changes the name first to Censored, then to NoName.
6. Cartoon Network Buzz-Marketing Flop
To build buzz for its animated show "Aqua Teen Hunger Force," Turner Broadcasting's Cartoon Network places electronic lightboards throughout Boston, triggering a bomb scare that shuts down two bridges, an expressway, a subway station, and a stretch of the Charles River. The devices depict a character from the show saluting passersby with an upraised middle finger.
7. Analize This
In March, shortly after No. 2 U.S. subprime lender New Century Financial announces a major earnings restatement as a result of failing loans, Bear Stearns analysts Scott Coren and Michael Nannizzi write a research note on New Century. They argue that despite New Century's stock having plunged 50%, to $15 per share, its downside risk is no worse than $10 in a "rescue-sale scenario." Within a month, New Century drops below $1 a share, is suspended by the NYSE, and files for Chapter 11 bankruptcy protection.
8. Oral B Vibrator
Lawyers representing Procter & Gamble send a 66-page cease-and-desist letter to British sex-toy company Love Honey, demanding that it stop using images of its Oral B electric toothbrushes to promote a product called the Brush Bunny - a rabbit-shaped piece of plastic that slips over the top of an Oral B to turn it into a vibrator.
9. Best Buy Kiosk Scam
The state of Connecticut sues Best Buy for setting up in-store kiosks set to a website that looks identical to bestbuy.com but lists higher prices than those they would actually find online.
10. The $54 Million Dollar Judge
District of Columbia judge Roy Pearson loses a $54 million lawsuit against the owners of a dry-cleaning establishment that he claims misplaced a pair of his pants. Pearson argued that the cleaner committed fraud by failing to live up to the SATISFACTION GUARANTEED sign displayed in the shop. Four months later a judicial review committee votes against reappointing him to his post, finding that he failed to demonstrate "appropriate judgment and judicial temperament."
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Land Of Odd: School District To Pay $95,000 In Legal Fees To Families That Pooh-Poohed Dress Code
land of odd
Officials in a Northern California school district might not think Tiggers are such wonderful things after agreeing to pay $95,000 in lawyers' fees to five families who sued the school over its dress code.
The parents went to court after a student was disciplined for wearing socks with the "Winnie the Pooh" cartoon character Tigger on the first day of school last year.
The district's superintendent said Thursday that the settlement money is for the plaintiffs' lawyers; the district is also on the hook to pay the lawyers it hired.
The settlement also says Redwood Middle School may no longer require students to wear only solid-color clothing.
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Land Of Odd: Man Shoots Himself In The Ass
land of odd
SCOTTSDALE, Ariz. - A Scottsdale man inadvertently shot himself in the buttocks Thursday morning. Scottsdale police Sgt. Mark Clark said Daniel Leatherman, 26, heard a disturbance outside his apartment and saw a man he knew fighting with a cab driver.
Leatherman told police that the man, Cody Nunn, 25, had assaulted him in the past, so he grabbed his gun and went outside.
Leatherman told police that he accidentally dropped the gun while hiding it behind his back and shot himself in the derriere.
Nunn and Leatherman’s friends took him to a local hospital. When police arrived, Clark said Nunn was drunk and disruptive. He was arrested on suspicion of disorderly conduct.
Leatherman was released from the hospital later Thursday. There were no phone listings for Leatherman or Nunn.
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