Barron's newspaper sees Starbucks shares rising 30% in the next year

The paper believes in Howard Schultz's turnaround plan, as it uses the headline "Something Good is Brewing." The Starbucks CEO tells Barron's:
* "We have the resources and the tools to execute to execute on a well-thought-out plan."
* "Oatmeal has gotten off to a great start. We already know we have a winner."
* He says Starbucks will unveil a new card program this fall -- no doubt, referring to the gold card that's being tested -- that will "surprise and delight" customers.
The writer of the Barron's piece (the full story requires a subscription) advises: "If the economy continues to weaken, Starbucks would be wise to publicize the fact that its drip coffee doesn't cost much more than the next guy's in many markets." || Starbucks shares could perk up 30% (Reuters)

Comments

[Pat Nerr]

gawd... that would be nice.

[BOSTON STARBUCKS REBEL]

Most of my stock options would be worthless.

[Darleen]

Let's not even go there....

[Coffee Soldier]

So does anyone think we'll get any Bean Stock this year at all?

[Melody]

How does bean stock work? Is stock just given to you?

Webmaster Jim - I think you've used that same photo of Howard Schultz a number of times! Time for a new pic! LOL (just kidding!!)

[Pat Nerr]

why don't you give him some of yours Melody? Not the ones you frame... just the throwaways

[Melody]

Grrr and MR. NERR you avoided the question about how the stock grants and/or bean stock works! :-<

You're a hoot Mr. Nerr! Thank god we already know you're full of ... a good sense of humor!

[Pat Nerr]

based on company performance, the BORED votes on what % of partners' salary they'll give... The max being 14%.

So you get that amount set aside in options (they use the stock price from the last day of the fiscal year) and then the vesting schedule is 25%/ year.

Say a partner makes 10K/year... a 14% grant would be $1400 (or $350 each year). It usually takes 3-4 years for it to even be worth it to exercise the options.

In typing this out, I just re-realized why partners have no idea what the hell Bean Stock is or how to even benefit from it...

...unless you're Kenny

[BOSTON STARBUCKS REBEL]

That's too funny. If Meloday is out of pics I have a few. Anyway, I just woke up and was listening to Dave Matthews singing "The Best of What's Around."

[jabanga]

"It usually takes 3-4 years for it to even be worth it to exercise the options."

-pat nerr

as you well know pat, that wasn't always the case...it was always worth it to wait longer but there were many years, including my last (fiscal 2006) where you could make a tidy profit in one year.

[Darleen]

Boston Starbucks Rebel,
My all time fav of Dave Matthews is Two Step. There is a verse that says "Celebrate we will, for life is short but sweet for certain, we'll climb
on two by two, to be sure these days continue. Things we can not change"

Love me some Dave!

[BOSTON STARBUCKS REBEL]

I also love listening to Two Step. My personal favorite recording is Live Trax, Vol 6 at Fenway Park. You can almost see me and my apartment. When Dave visits Boston, he goes to supposedly the Starbucks on Newbury.

[Melody]

I know I'm going to regret posting this - If webmaster-Jim has no more Howard pics, maybe he can just substitute a Dino Rossi* photo? My boyfriend has joked many times that he thinks that the two of them look a lot alike, and when ever he sees Howard on the front page of the times, he has to think, "is that Howard or is that Dino?"

*Dino Rossi is a washington state politician.

Webmaster-Jim - Maybe we need a whole Kara Davis thread? There have been a lot of those kinds of posts.

Oh, and Dave Matthews rocks! Love him!

[Barista]

Melody, what the hell.
Dave Matthews is a band.
"Love him!"
????

DOUCHE!

[Melody]

Dave Matthews is the lead vocalist with a great voice.

[Darleen]

Melody, what the hell.
Dave Matthews is a band.
"Love him!"
????

DOUCHE

Nice words Barista. Guess it isn't hard to tell who was behaving like a douche.Oh, and BTW Barista, his name is DAVE MATTHEWS, check out your info. before calling folks a douche.

[Zeus]

Melody, I agree. There have been quite a few posts on this Kara Davis (Swinehart). If its the same person, her behavior is inexcusable. The fact that she displayed similiar behavior in Michigan and was not only allowed to tranfer but was rewarded with a promotion is disturbing. Has there not been any documentation on this person?She must have connections.

[Barista Joe]

I love Howie, but if he says "surprise and delight" one more time...

You want to "surprise and delight" your customers? Give them free wi-fi, tell your partners to actually offer people ceramic cups and plates instead of throwing some milk and espresso in a paper cup and handing them a bag with a fatty pastry in it. Make Starbucks a cafe again, instead of charging ridiculous prices for a quick energy rush and a crappy pastry. Make people get some more bang for their buck.

As for stocks going up 30%, I don't think anybody's gonna be going up after today... ><

-J

[smalrus]

Here's a readable version of the Barron's article (http://online.barrons.com/article/SB122247553165981123.html?mod=b_hps_9_0001_b_this_weeks_magazine_home_right&page=sp)

Amen to Barista Joe though... not quite sure how they're going up 30% when the market tanked nearly 8% today. True, commodities prices have gone down since a March high and peaks in the beginnings of July and September, but still...

The only way it seems that Starbucks could ultimately buck a domestic (and in due time, likely global) recession is if they stopped alienating their ad agencies (see other post on sbuxgossip) and work on thoroughly branding "affordable luxuries" (as the "mercurial Howard Schultz" often spews in his literature).

It's times like these when, paradoxically, marketing budgets shrivel up at the time they should be most necessary. 30% by the end of 2009? Possible, but highly unlikely.

[Leyla]

I agree with Melody, I think this whole Kara Davis issue needs to get some light shined on it, and we all know the power of Starbucks Gossip and how it can light a fire under the people at the SSC who would much rather this who issue be swept under the rug.

I second Melody's idea for a Kara Davis thread with hope that we can help the partners who are being affected by her presence at Starbucks

[PhillySM]

Stock options work like this:
At the end of the fiscal year (September) Starbucks determines the granted stock option price. Each partner is given a number of options based on a percentage of their salary For example, you make $50,000 and you are give 10% of your salary in options. You would receive 5000 stock options at the granted price. Let's say the granted price is $10.00. It takes four years for these options to vest fully. The first year 25% of the options vest (in this example that would be 1250 shares)Each year the options vest at 25%. After the options vest you have two options. One- you can purchase your 1250 shares at $10 each, regardless of how much the stock is currently being traded for on the NYSE. Two- you can sell your options. This is how a lot of partners made a lot of money early on in Starbucks growth. When you sell them you are selling them the price at which the stock is currently trading for on the NYSE. If the stock price is $20, you would earn the difference between your granted price and the trading price. You would earn $10 per each stock. So in the first year you would earn $12500. Each year you can do this every time your options vest. Bean Stock is great in theory if you're trying to make money. Right now the problem is that most partners have Bean Stock which is worth more than what the stock price is trading for on the NYSE. For example, your Bean Stock grant was $10 but the stock is trading for $5 on the NYSE, therefor your stock is pretty much worthless.
I may have the first statement of this incorrect about how many options each partner is given (but I'm pretty sure I'm right), but the second half is correct. I have Bean Stock that is worth almost nothing because my option price is much higher than what the stock is currently trading for. But I'm hanging in there in the hope prices come up!!

[Cut Out The Heart]

A person like Kara Davis (don't know her but sounds like she is a bit of an issue) stays working for Starbucks when so many quality people were let go.

What the heck Chet?

[Alex]

Webmaster Jim- I'm going to (second/third/whatever) the idea that this Kara Davis thing should get its' own thread!! If you put it on the front page, there's no way corporate can ignore this thing. And I think they should investigate it, at the very least

[I'dRatherNotSay]

I also agree...This would be a safe enviroment in which to expose Kara Swinehart Davis, it might be the only chance to have the truth be told without her being able to interfere or try to cover it up! She won't be able to charm her way out of a bad situation on here. Give people a chance to get their voices heard without fear of losing their job or retaliation from her. I know there are many more stories out there, other than the few that have been brought up so far. Let's get this out before they head to New Orleans!

[Zeus]

I'd Rather Not Say,
I saw your postings on a previous thread. Were you a victim of this person? It's obbvious if you were'nt, you know several people who were. It's a shame that her conduct has been allowed to go on unnoticed by upper management. I don't know why your DM or HR department did'nt listen and document it..... or they just chose to ignore it and transfer her out or "get rid of the problem". It's hard to believe so many people can be afraid of just one person. I feel bad for everyone that's gotten caught in her path. Please share more stories or encourage those that you know were hurt by her to do so. I agree, the only way to stop her is to speak out.

[Cathy]

Im sorry for what you all are going through. Hang in there. It's only a matter of time, Starbucks will do the right thing.

[Melody]

To Leyla (and others): I find it a bit indecorous to talk about others (Kara Davis) the way that is going on here BUT it seems really clear that there should be a Kara David thread because (i) lots of people want to talk about it and (ii) This IS a gossip site! Better here than msi.

I did a search and discovered that she has an empty V2V profile:
http://www.v2v.net/people/karabethdavis

Folks,
Re: Kara
I would encourage caution here.

There could be something real here, yes.
However, this could easily be a personal attack being led by an unhappy partner (or two) intended to destroy another's reputation.

Considering that these kind of investigations are confidential--to protect everyone--it's not likely that anyone here will ever know either.

Is it gossip? Yes. But I think the personal attacks of a named SM or DM crosses the line to a darker side of gossip. One that often does more harm than good.

A few years back a friend was accosted at her home by a news reporter about allegations against an employee of hers. Even though it wasn't about her, the event still terrorized her family.

During the investigation the employee making the accusation recanted.

Still the falsely accused individual's reputation was so damaged that he left the company shortly thereafter.

It's stories like that that lead me to encourage caution.

[20secondshotguy]

Those two above are me.

[StLouieDrip]

I would think it's indecorous to spread unfounded rumors about someone just for the thrill of gossip. But if you've had a direct contact with her, and/or have heard words directly from her mouth with your own ears that you're posting here, or have made a formal complaint about her and gotten no results, or have known for a fact that someone who is gay was threatened by her, or was fired for being gay, or if you feel in any way harassed or terrorized by her, then that puts it in a whole other category. Just my opinion.

But also, you'd probably be better off contacting a lawyer than a gossip site. Go through the proper channels. Find out sbux's formal policy for when one feels mistreated, and then follow it as closely as possible. Also, keep a detailed written log of all incidents. Write down a full description of any event, with date, time, location, names of all people involved, witnesses. But don't make an audio recording of anything without legal advice. File all the appropriate complaints in written form to HR. Keep copies of absolutely everything. And definitely get some legal advice. Even if you don't want to follow through with anything legal, still consult a legal profession to establish your options, to give yourself clarity about the situation.

Also, don't kid yourself into thinking those higher up don't already know about her. They know. The real question is why are they ignoring the complaints.

Also consider who hired her, and who is her direct supervisor, and who writes her evaluations. Just remember that she is not there by mistake.

[Gronday]

we still want to know what it is that Melody gave Uncle Howie, did we miss it somewhere?

[Mikey]

Speaking of the gold card, it's not the gold card that's being tested in Vancouver, BC or Denver. There will soon be a launch of another Starbucks Card program where customers pay an annual fee of $25 to participate in the program to save 10% on their purchases. The card looks like the American Express elusive "black card". It's black card with a starbucks cup (in gold) in the middle. The back side of the card, has the magnetic swipe along with the Starbucks corporate logo...

Unusual idea... it's almost like a Costco membership due, in order to join...

[Melody]

@ Gronday - I regret having posted that. And I did not get my 15 minutes of cross-examination with Howard (which would work out to 10 minutes, and 5 minutes of me calming down). Yeah, it was probably not good taste on my part to post about the gift here: TMI.

@Mikey - Do you know how the new Gold Card is different from the old one? It's not an unusual idea - Just for example, The Body Shop (www.thebodyshop-usa.com) has had a "Love Your Body" card for many years where you pay a fee and then get a percentage off all your purchases for that year, plus special coupons. I can Love My Coffee too. ;-)

[Mikey]

It seems that this $25 annual fee Starbucks "black card" program differs from the current pilot where there's no free drinks on your b-day, no buy 10 drinks get one free. From what I gather, it's just a 10% off any purchase at a Starbucks store. Definately, would be good for a person who spends $20 a week... Can save over $100+ in a year.

[shortsleep]

current ticker on a horrible day for the dow, currently down 387 points,

Last [Tick] 12.9600[ - ]
Change -0.7000
% Change -5.12%
Bid 12.9600
Bid Size 26
Ask 12.9700
Ask Size 130
Open 13.3300
Volume 5,022,584
Day High 13.5800
Day Low 12.6900
Previous Close 13.6600
Prev. Close Date 10/03/2008

[Pat Nerr]

$11.53 on 10/8... I'm guessing that Peter Gibbons won't be wanting some kind of 'profit sharing' any time soon...

Worst day ever for the DOW. :( Any thoughts on the future of Starbucks as it sinks to the single digits? Just curious.