Kraft Foods, Inc., An American Made, Globally Inspired

If you order a Big Mac or hamburger with cheese at any of your favorite restaurants, anywhere in the US, then chances are, your cheese is made by Kraft Foods, Inc., (NYSE: KFT), (“Kraft Foods”), the largest branded food and beverage company in the United States and the world’s second largest, only behind Nestlé, based on 2000 pro forma revenue. The company’s fiscal year is December, and as of January 21, 2009, according to the company’s web site, Kraft.com, it has approximately 103,000 employees worldwide and more than 180 manufacturing and processing facilities worldwide.

Based in Northfield, Illinois, Kraft Foods, Inc’s North America unit makes the world’s largest cheese brand (Kraft), owns the cookie and cracker business (Nabisco) and makes the US’s most favorite, Oreos. Its brand products are distributed worldwide through its international business unit. Kraft Foods has one of the world’s most recognizable core brands which are sold in more than 140 countries, and according to A.C. Nielsen, are enjoyed in 99.6% of the households in the United States.

The company’s brands and businesses including; Oscar Mayer, Kraft, Philadelphia, Maxwell House, Nabisco, Oreo, Jacobs, Milka, and LU brands, which together have quarterly revenues of nearly $10 billion (MSN Money). The company was founded in 1767 and in 1988, Kraft, Inc (http://www.kraft.com) became a part of Altria Group, previously known as Philip Morris Companies Inc., which purchased Kraft for $12.9 billion, and operated it as a wholly-own subsidiary until 2007 when it was spun off, amid that the Altria’s tobacco lawsuits, a result of alleged second hand smoke would tarnish Kraft’s image, in terms of consumers.

Prior to going public, Kraft Foods generated 2000 pro forma revenue of $34.7 billion and 2000 pro forma earnings before interest, income taxes, depreciation and amortization of $6.3 billion. The company filed with the US Securities and Exchange Commission (SEC) for its long awaited and most anticipated Initial Public Offering (IPO) on March 13, 2001, and went public on June 10, 2001, traded on New York Stock Exchange (NYSE) under the ticker symbol; KFT. Its initial proposed stock price was set at $30.00 to $31.00, but the actual offer price was $31.00. Its stock price on the first day of trading was $31.00, and closed at $31.25 at the market closing time, a net gain of 25 cents. The company’s shares offered at IPO was 280 million shares, with an offering amount of $8.7 billion, making it one of the largest IPO offering, ranked only second behind 2001’s $10 billion-plus offering of stock in AT&T Wireless, which by far, was the richest U.S. initial public offering ever.

The offering price valued Kraft Foods at about $53.8 billion, and as of today, January 21, 2009, 5:00 PM EST, according to Yahoo! Finance, Kraft Foods market capitalization is value at $41.62 billion, a 22.64% drop since its IPO.

“The 280,000,000 Class A shares offered in the IPO represent 16.1% of the combined total of 1,735,000,000 Class A and Class B shares outstanding immediately after the offering. Net proceeds of the offering of approximately $8.4 billion will be used to repay a portion of Kraft’s long-term notes payable to Philip Morris” (AllBusiness.com).  “We will use the net proceeds from this offering to retire a portion of an $11.0 billion 7.75% note payable to Philip Morris, due in December 2002, incurred in connection with the Nabisco acquisition” (Edgar Online).

The company’s shares outstanding at IPO were 555 million, but its post IPO offering were 1,735 billion shares. Today, January 21, 2009, Kraft Foods stock closed at $28.33, its highest traded price was on May 28, 2002, at $43.01, that’s a drop of 65.56% since May 28, 2002, and its lowest trading since it went public was when it closed at $26.56 on November 17, 2008.

“Kraft Foods’ IPO was underwritten by several underwriters including; Credit Suisse First Boston, Salomon Smith Barney, Deutsche Banc Alex. Brown, J.P. Morgan Securities, Inc., Morgan Stanley Dean Witter, UBS Warburg LLC, BNP Paribas Group, HSBC Securities, Inc., Lehman Brothers Incorporated, Blaylock & Partners, L.P., Dresdner Kleinwort Benson, Prudential Securities, Inc., Ramirez & Co., Inc., Sanford C. Bernstein & Co., Inc., and Utendahl Capital Partners, L.P” (Edgar Online).

On November 15, 2007, Kraft Foods agreed to merge its Post cereals business into Ralcorp Holdings, Inc., and on June 25, 2008, “Kraft commenced its exchange offer related to the split-off transaction of its Post cereals business. Kraft will provide indicative calculated per share values and exchange ratios for each of the trading days that the exchange offer is open. The final exchange ratio will be calculated using the volume weighted average stock prices (VWAP) of Kraft and Ralcorp on July 30, July 31 and August 1, 2008, and will be announced by 4:30 pm ET on August 1. The exchange offer will expire at 8:00 am ET on August 4, 2008, unless extended” (Edgar Online).

The lowest drop in its stock price on November 17, 2008, was probably the result of its Post merge with Ralcorp Holdings, Inc. According to its balance sheet for the quarter ended on September 30, 2008; the company had a cash and cash equivalents of $737 million, while its total current assets are capped at $11.3 billion, total assets of $66.9 billion. Its total current liabilities are $10.3 billion, with total liabilities of $40.5 billion. The net tangible assets are (-$15.7 billion), while its long term debts are $18.9 billion. The company’s account payable is $6.09 billion. (Yahoo! Finance).

Today, amid the current US economic crisis and the recession, Kraft Foods, Inc. is still strong, its stock performance is relatively steady, part of the Dow 30, and is one of the world’s most actively traded companies on Wall Street.

Disclosure

I am currently not an investor nor do I have an immediate investment interest in Kraft Foods, Inc. I have not been compensated by anyone, in any way, shape or form, to write and publish this article anywhere.
 
References

MSN Money. “Kraft Foods Inc”.  IPO Center. Retrieved on Wednesday, January 21, 2009, from http://premium.hoovers.com/global/msn/factsheet.xhtml?ID=103392.

US Security and Exchange Commission. Edgar Online. Retrieved on Wednesday, January 21, 2009, from http://www.sec.gov/edgar/searchedgar/companysearch.html.

Yahoo! Finance. Kraft Foods Inc. (KFT). Retrieved on Wednesday, January 21, 2009, from http://finance.yahoo.com/q?s=KFT.

Kraft, Inc. Official Corporate Web site. Investor Center. Retrieved on Wednesday, January 21, 2009, from http://www.kraft.com/default.htm.

Filed under: blog this, business, food , business, foods, IPO, KFT, Kraft Foods, Kraft Foods IPO, Maxwell, Nabisco, Nestle, Oreo, Oscar Mayer, shares, stock

Are ‘Music’ Record Labels Still Needed?

When coming to the Internet and music, there has been a long history of disruptive innovations, which some have caused controversy in online marketplace, but most of them have changed the music business and its revenue flow model.

In April 2000, Prince, also known as The Artist Formerly Known as Prince, became the first subject ever, to trade music online, in terms of pay-to-download. He released his remix album, “Rave In2 the Joy Fantastic”, exclusively through his NPG Music Club. That was in the year 2000, and the music industry should have seen this coming, but they stayed asleep, while the online music marketplace moved forward, evolved, and embraced the new business model, a no-revenue generation model as opposed to the traditional brick-and-mortal music stores.

The article, How Much Music is Worth, which was published in the Newsweek magazine, of October 29, 2007, further describes the disruptive online marketplace for the music industry. The article talks about the British rock band, Radiohead, which caused even further controversy in online music marketplace.

The band produced its much anticipated new CD, “In Rainbows”, but didn’t release it in the old fashion way, but made it available for download online. Not for-pay to download, such as what Prince did in April 2000, but for Radiohead, anyone could download its newly produced CDless music from the band’s official web site, and the twist to this was; there was no price tag on it, for what the user should pay to download the music.

The band left the price field empty left it up to the user to decide how much to leave in the band’s eshopping cart for downloading its songs. That’s right, you could download the entire new CD, without paying a dime, it’s up to you to decide how much to pay. But to get an unprotected code, a user is required to pay only $0.90, so you could download and play the songs on any device such as iPods, Zunes, and PCs.

The article reports that in the first few days of the band releasing their new eCD, over 1.2 million visitors to its web site downloaded “In Rainbows”. The article further states that consensus survey found that many customers paid $5 to $15 to download the band’s music, while some paid nothing.

But that’s not the whole story; the music industry has long been faced trouble, with users downloading songs online for free. It all started with the then Napster, which allowed the sharing and downloading of music online by anyone, anywhere. This led to the music industry scrambling to file lawsuits for anyone and everyone who downloaded their music online. To which they had no success, because two weeks ago, the music industry organization RIAA announced that it will no longer file lawsuits for sharing and downloading songs online for free.

Steve Jobs, founder of Apple, seemed like he was the long awaited savior of online music, with his introduction of IPod and iTunes Music Store.

However, to make it even worse, Steve negotiated with the music record labels to sell songs on Itunes Music Store for a flat fee of $0.99 per each song and only $10 per each CD download. This price is rather ridiculously low compare to the traditional CD pricing, which can rack up to $17 per CD, but with that, you get a CD with all kinds of songs, even those you don’t like. But, with online music, you get to pick which one you want and don’t want. The music industry went along with Steve’s proposal. However, they became unhappy because they realized that Steve was making more money selling iPods, than they do selling songs.

The article asks if $0.99 is the right price paid for each song on Steve’s iTunes Music Store. The answer is no. But it caused a high price elasticity of demand for online music trading.

“In general, as the price of a good rises, consumers will usually demand a lower quantity of that good; they may consume less of that good, substitute it with another product, etc. Actually, the greater the extent to which demand falls as price rises, the greater is the price elasticity of demand. Conversely, as the price of a good falls, consumers will usually demand a greater quantity of that good: consuming more of that good, while dropping substitutes” (Wikipedia.org).

In this case, as the price of music falls due to the downloading and sharing of songs online for free, the greater the demand, causing the price elasticity of demand to skyrocket. This in part is due to the fact that, even if consumers have no substitute for music, it’s not like, when the price of music rises, that consumers will replace it with something else, they just stop demanding for more. But now, they have more option on where to buy or share their music, or rather, where to download, at the lowest price and sometimes for free. And, free is always better when coming to music.

Newsweek Magazine should not have asked how much music is worth, but whether Record Labels are still needed, given that any artist can now release an album or in this case, an eCD, and make it instantly available to the general Internet users, without involving the Record Labels’ bureaucracy.

Filed under: entertainment, music , Apple, artists, In Rainbows, iPod, iTune, lawsuit, music, Napster, Prince, Radiohead, record label, songs, Steve Jobs, Zunes

Google Should Aquire Mozilla Firefox

The best business marriage could be forged between Google and Mozilla.

Google is trying to break into the Internet browser business with its not-too long ago launched browser, Chrome. And, Mozilla’s Firefox has been closing in on Microsoft’s Internet Explorer, which so far has not caused any serious threat to the Internet Explorer.

Mozilla’s Firefox homepage is integrated with Google’s Search as its default search engine, which still doesn’t necessarily make a difference. But, Google can easily break the market barrier, simply by acquiring Mozilla’s Firefox and then integrate its Chrome and Search technology within Firefox.

By doing so, will serious cause competitive efficiency to the Internet browser market, which will greatly best serve and benefit the users.

Filed under: Google, Internet, Tools, adsense, advertising, adword, article, blog this, technology , browser, Chrome, Firefox, Google, Google Chrome, Internet browser, Internet Explorer, Microsoft, Mozilla

Does the buying of a crib cause the birth of a child?

Please post your comment with your assumptions and or hypothesis to the following question?

“Does the buying of a crib cause the birth of a child?”

What is the first thing that comes to your mind when you see that question, and what is your logical fallacy, if any, to that question?

Creative thinking intended.

Filed under: article , birth, economics, education, fallacy, logical, parents, pregnant, social, sociology

Should OSU Fire Buckeyes Head Coach Jim Tressel?

The Ohio State University’s Football Team, The Buckeyes, tonight lost to Texas in the highly anticipated and publicized Fiesta Bowl Championship game, 21 – 24.

After losing several series of games in the last few games, does that mean that coach Jim Tressel has lost his mojo, and that he may never be able to rebound the Buckeyes?

One may think that this is the sign that coach Tressel has passed his prime time, and that he no longer has the ability and stamina to coach and lead the Buckeyes Football Team to win any more games, let alone any championship.

Should the OSU Athletic Department start to look for a new football coach?

These are some of many questions that some Buckeyes’ fans are asking themselves, but, may be coach Tressel won’t be that easy to replace. There may not be anyone else, as good as a college football coach as him, to coach and lead the Buckeyes to more victories.

Filed under: Football, Sports , Buckeyes, coach Tressel, college football, Columbus, Football, Jim Tressel, Ohio State, OSU

The RentersQ Groups: Earn $25 Per Each Member

Create and become the owner of your own RentersQ Group and earn $25 each time any member of your group successfully refers anyone to rent at any of the RentersQ Referral Program participating rental properties around the world.

It’s that easy; your group makes $25 each time, any member of your group successfully refers anyone to rent at any of the RentersQ Referral Program participating rental properties.

What do you do after you’ve created your RentersQ Group?
You simply market and promote your group in order to have people from anywhere to join your group for free.

That’s it. You don’t do anything else, except easily confirm each referral with the click of the mouse from any computer, while you just sit back and make $25 each time, any member of your group successfully refers anyone to rent at any of the RentersQ Referral Program participating properties.

How much money per month can you make from your group?
Do the math; because that simply depends on how many members your group has and how many members of your group actually complete referral transactions per month in order for them to earn $200 per each referral for themselves.

It’s fast and free for anyone to create any RentersQ Group or and even easier for anyone to join any of the RentersQ Groups.

Register now with RentersQ for free and apply to create your own group or learn more about the RentersQ Referral Program.

Filed under: advertising, apartment, houses, landlord, promotion, real estate, rent, tenant , apartments for rent, groups, houses, lease, referrals, rent

A Very Sad Day for John Travolta: Actors’ Son Jett Travolta Dies at 16

Children anywhere, are not supposed to die at this young age, specifically from a disease, an epileptic seizure, especially in some of the countries with the best medical facilities. It’s very sad, very, very very sad, for any parent to lose a child, anywhere.

I was traveling yesterday and wasn’t able to keep up or check the news, and today Saturday, I woke up late, at 7:00 am EST, and as usual, I logged onto CNN.com and BBC News, for my daily breakfast news and current events, and my eyes suddenly have gotten wet, my heart feels sad, as I read the headline news that John Travolta’s 16 year old son, Jett Travolta, died of seizure while vacationing in the Bahamas.

No parent anywhere should go through that, especially that its cause is a disease. It’s already the worst feelings for any one to lose his or her loved one by any cause, but when it’s a teenage child, it’s devastating. As a parent, you hope and expect that your children will be grow up happy, healthy, and grow older, but when a child dies, it’s very sad.

Just imagine the parents and childrent in Darfur, where death has become a common daily thing; and the cause is man made.

My heart and prayers go out to the Travolta’s family.

Read more at CNN.com.

Filed under: events, health, life, living , children, death, family, Jett Travolta, John Travolta, kids, parents, seizure, teens

Latest Update: GoDaddy.com’s Shady and Unethical Domain Names’ Renewal Process

I recently wrote about how unhappy I am about GoDaddy.com’s possibly shady and unethical domain name expiration procedure. And, today, I received an email from someone ,named, Alon, from The Office of the President at GoDaddy.com, who wants to talk to me about my concern.

The following is the email copy I received from him;

Go Daddy – concerns about domain expiration procedures

Friday, January 2, 2009 3:38 PM

From: “**********@godaddy.com” *************@godaddy.com

To: simon@rentersq.com

Dear Mr. Kapenda,

I recently came across an article you posted to your blog regarding Go Daddy’s domain name expiration procedures:

http://princesimon.wordpress.com/2008/12/30/godaddycoms-shady-and-unethical-domain-names-renewal-process/

Specifically, you stated that Go Daddy parks domain names approximately 40 days prior to expiration if not renewed. I would greatly appreciate the opportunity to speak with you about your concerns because I can assure you that Go Daddy does not normally do this. I’d like to learn more about your experience to see if anything occurred that should not have or if there is simply some confusion that needs to be cleared up.

If you can find a moment, please contact me by phone at your earliest convenience. Of course, I’d be happy to call you, if you’d prefer; just provide a phone number and let me know when would be a good time to call. If you’re unable to speak by phone, please respond via email and let me know at least one domain name that you believe was handled this way so that I can investigate.

If you have any other concerns or questions, please also feel free to contact me.

Regards,

Alon
Twitter: GoDaddy*****
G*********@GoDaddy.com
Office of the President, GoDaddy.com
10am – 7pm, US Mountain Standard Time
(480) 505-8828 Phone
(480) 275-3975 Fax

I emailed him back, telling him that I will call him early next week.

I appreciate the fact that GoDaddy contacted me the soonest I posted that blog. I give them credit for that, but the fact is, I am not happy how they do business when coming to their domain name expiration procedure.

My request is for GoDaddy to change the way they do business, in regard to their expiration processing procedure, because it’s not just hurting me, it’s probably hurting everyone who registers domain names with GoDaddy.com.

I will keep posting here any and all the updates on this subject matter.

Example of one my domains that are expiring soon, and have already been forwarded to GoDaddy’s parking page with paid ads, is Tipmart.co.uk (www.tipmart.co.uk). This domain expires on January 9, 2009, but since mid November 2008, this domain has been redirected from my web site; Tipmart.com, to GoDaddy’s parking page. I have had several domain names, including .com’s, which GoDaddy has done the same thing, and I have lost several of them as explained in my previous post.

Stumble It!

Filed under: GoDaddy, Web 2.0, adsense, advertising, adword, blog this, branding, business, domains, technology , domain, domain names, domain registration, domains fraud, GoDaddy, registration

Tyler Perry’s Madea Moves to Bart Simpson’s Springfield?

Like most of you, I have been watching and am still stuck with The Simpson since the first episode aired in 1989. It’s the longest TV show ever, and will continue to reign for years to come. However, will its audience dwindle with age? As more and more of the Y Gen starts to grow into watching reality TV shows and more up-tempo shows, who will remain to continue watching The Simpson?

Also, what kind of audience, race and gender, will The Simpson continue to attract? I am not currently aware of the breakdown of its audience by gender and race, but I can guess that in order for The Simpson to continue with its reign on TV rating, the producers need to look elsewhere, to be more creative, and definitely go out of their production-comfort zone.

By saying this, I mean, they have to do something, unthinkable, in order to attract more young people, especially the Hip Hop generation. The Simpson’s producers have to think of a better way to bring the show more to the mainstream, urban community. And the only way they can do so, is to incorporate urban characters, geared toward the hip hop community, both blacks and whites, just look at Madea’s movies ratings and box office income.

There’s not any other character, which can help fill the void within the show, and attract more black audience than Tyler Perry’s Madea. Imagine, cartoonizing Madea into its current character, attitude and behavior, and move her in to Springfield to be the new neighbor of the Simpson’s. She can be made either to be one of Bart’s school teachers, grocery store owner, or a nosy, irritating and annoying neighbor.

She and Mrs. Simpson can even end up being friends; they can go work out together, get their hair done together and just hang out. She will be rallying the kids in Springfield with her disciplinary wit and her loud voice.

Madea is the definite solution for The Simpson, she will help to raise The Simpson’s audience exponentially, and it won’t just be the young adult of the African American community who would be watching the show, but you will see more and more older black folks watching the show. I am not sure how its current audience will perceive the show, but the producers can always do a pilot with Madea and see how it turns out.

I only have one request, if it turns out that you decide to experiment this hypothesis, that I’d appreciate you reaching out to me and just give me a shout out. Just try it, it won’t hurt. With Madea moving in Springfield, I assure you that the show will turn out and will continue to be one of the highest shows rated on TV.

Filed under: TV, Tv show, blog this, culture, entertainment, launch, movie, music, shows , African Americans, Bart Simpson, blacks, cartoons, hip hop, Homer Simpson, Lisa Simpson, Madea, Maggie Simpson, Marge Simpson, Nancy Cartwright, Springfield, The Simpson, Tv show, Tyler Perry

Apple’s Possible Future Without Steve Jobs

I am not and have never been a fan of Apple or its products, except its stock in recent years, but I like what Steve Jobs did by turning around the company.

Prior to the introduction of its new products such as iMac, iPod, etc, Apple seemed like it was going down the hill. For instance, in December 1997, its stock hit the lowest at $3.28. Most analysts then seemed to have written it off until the settlement of Microsoft’s antitrust case, coupled by the introduction of Apple’s new products; iMac, etc.

The problem that seems to face certain companies is when one solely brands and ties the company to the Founder/CEO, and if something happens to him or her, then it may seem like the company itself may also go down. So, with Steve Jobs, it may look like without him at the realm, that Apple may not do as good, but surely, it will hopefully continue to thrive.

Steve only needs to do what Bill Gates has done, by identifying or appointing his future replacement soon, so that the market can get to know and get used to the person who may replace him some day.

Filed under: Apple, Computers, technology , Apple, Bill Gates, iPhone, iPod, iTunes, Microsoft, Steve Jobs