Knobias ClipReport (7-6-2007)

Submitted from Knobias ClipReport

Thursday’s action was expectedly slow as many in the industry were using vacation days following the July 4th holiday to extend their break through the weekend. Even though fireworks were seen over the holiday, the market seemed to lack the spark to ignite any type of rally with the lowered summer volume.

The largest news piece seemed to be the buyout of Hilton Hotels Corp by Blackstone Group in a reported $26 billion deal. The acquisition continued the private equity buyouts of major names in the market, and of course, following the acquisition, others in the hotel industry subsequently became buyout candidates. Some of the names rumored were Marriot International and Starwood Hotels & Resorts Worldwide Inc. Needless to say, the hotel arena was the hot sector of the day.

In other merger and acquisition news, Advanced Medical Optics Inc. (EYE) was noted as having bid $75 a share for competitor, Bausch & Lomb Inc. (BOL). Shares of BOL were halted due to the news. Cooper Companies Inc (COO), another competitor in the space, saw its shares surge on the news.

Another name seemed to gain momentum throughout the day following the July 4th holiday. Jones Soda Inc. (JSDA) shares gained over 13% on over 4.8M shares traded. The Company is a producer and distributor of premium beverages and related products.

Many may have recognized their product with the quirky names like Turkey & Gravy and Fufu Berry while waiting in line for coffee at Starbucks. The Company had a deal with Starbucks to distribute the product but that decision was reversed by the coffee maker last month to make room for higher margined salads and sandwiches.

Following that announcement and the Company’s 1st quarter results, the name took a hit. Shares fell from highs in the $32 range to $14 before finding what seemed like a bottom.

The bottom comes at a time when the Company has some new initiatives in place to pick up the slack caused by Starbucks’ decision to drop the drink. Even though the Starbucks deal only accounted for 3% of the Company’s total revenue, the brand awareness was certain to take a hit.

The new initiatives involved some fairly timely and innovative ideas. Last week, The Company reached an agreement with Pharma Foods International Co. and Mitsubishi Corp. which granted the Company exclusive rights to use the Pharma Gaba amino acid in an energy drink line which was expected to be introduced this winter.

As many already know, energy drinks have been all the rage over the last few years following Red Bull’s entry into the market.

Another new initiative was the Company plan to release a new cola and diet cola drink this month, and their new contract with Qwest Field, the home of the National Football League's Seattle Seahawks, to supply it with drinks beginning in August.

The new initiatives should be apparent in the Company’s second quarter earnings which are expected early next month. With the other new initiatives being the Company’s product line now being distributed in higher margin cans, along with a so called “foot in the door” of the NFL, the name is certainly one to follow over the coming quarters. Add to the fact that the name has some impressive momentum and it’s easy to see why investors would be wise to watch.


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