Activist investor Peltz sells his stake in Starbucks

You can bet Howard Schultz & Co. are relieved. Nelson Peltz is known for pressuring companies to raise profitability by doing things that, well, they'd rather not do. (Read the Reuters story)

Comments

[Darleen]

That is certainly good news! Here's something for you guys to celebrate! Now maybe partners can put the thoughts of a hostile buy out to rest for awhile.

[feministabarista]

thanks be to the coffee gods..

Can we have some labor hours back now?

[espressoblend]

Well, that's interesting. Really thought Peltz was going to do something with that. I wonder if he's lost any cash in that transaction...

Oh, well... breathe free now, I guess.

[Cali ASM]

Can we have some labor hours back now?
Posted by: | August 14, 2008 at 03:52 PM

Thank you!!!!

[P.R.I.D.E.]

I would loooooooooooooooove to hear truth's response to this one...he was claiming the big bad monster was going to do just the opposite, with a 8/11 D-day....

[WaShift]

Well, that's interesting. Really thought Peltz was going to do something with that. I wonder if he's lost any cash in that transaction...

Oh, well... breathe free now, I guess.

Posted by: espressoblend

Does EspressoBlend ever have anything positive to say?

[wholahay]

no.

You are showing your naivety thinking Peltz is the only investor pushing Starbucks to lower costs and improve profits.

[ASM...slowly regaining confidence with SBUX.]

Where as I do see this as a relief in some small way, I understand that with the current state of affairs Starbucks Coffee is run by the Shareholders and not by the people that really know how to create the Starbucks Experience.

No one ever said anything about how fast we expanded all because the Shareholders TOLD them to do it, and now because of that pressure we are now having to close 600+ stores with many many more to come (just wait till the 3rd quarter FY09). Shareholders should trust in the company, after all they did invest in it because they trusted it, if they wanted to run the damn thing then they should have gone after the job.

[dmanagerla(former)]

don't worry, you'll get your labor back in October.
don't miss that at all!

[truth]

This is not the 'all-clear' signal you were hoping for.

As I said last week, the fix is in.

[truth]

Also, as I said last week, it doesn't matter what Peltz or the others did at this point.

Howard made a pre-emptive move.

[espressoblend]

Where as I do see this as a relief in some small way, I understand that with the current state of affairs Starbucks Coffee is run by the Shareholders and not by the people that really know how to create the Starbucks Experience.

No one ever said anything about how fast we expanded all because the Shareholders TOLD them to do it, and now because of that pressure we are now having to close 600+ stores with many many more to come (just wait till the 3rd quarter FY09). Shareholders should trust in the company, after all they did invest in it because they trusted it, if they wanted to run the damn thing then they should have gone after the job.

Posted by: ASM...slowly regaining confidence with SBUX. | August 15, 2008 at 12:15 AM

Well, if that trust hadn't been violated in the first place and the company wasn't in the current position due to a failure in that trust, I'd think that you'd have legs to stand on here.

Regardless, the company's being run as it should be. We'll (hopefully) see improvement soon. It's not really an option... if Schultz can't show successful results, the shareholders will demand a new executive to lead the company.

[Pat Nerr]

ESPBlend, do they call that "Musical Executives", "The Executive Shuffle" or... "Hide the Weinie"?

[Cali ASM]

if Schultz can't show successful results, the shareholders will demand a new executive to lead the company.

Posted by: espressoblend | August 15, 2008 at 05:39 AM

Perhaps that's what we need.

[A Starbucks Defector]

So, we have to ask why? I am tired of hearing Howard say " this is not the company he once knew". I'm sorry but who was sitting on the board when these decisions were made like expanding to 30,000 stores, expanding the food options, producing movies ( what a flop)and so and so on. We are so quick to praise him for coming and being this savior, but did he once in the last 6 years say at a shareholders meeting that Sbux was growing to fast? Did he say no to breakfast sandwiches when the board had to apporve it ( He is and was chariman right?)? Did he say no to producing or supporting a movie which took the attention of the barista's off coffee and had them peddling a movie? And did he say no to making the stores look more like Blockbusters with cd's and dvd's when he was accepting grammy's and hob knobbing with Hollywood? Think not. Do not get me wrong, I like Starbucks and at one time loved Starbucks but to see all the experience and life in the company be removed because one man views them as being the reason his company no longer looks like the one he once knew is simply crazy. For all the loyal Howard supporters, ask yourself one easy question. What was he doing when all these decisions were being made? Seems no one will ask or did ask him that for the last 6 years. One last note. Orin is not walking through that door to save him again.

[Cali ASM]

A Starbucks Defector | August 15, 2008 at 05:50 PM

Time for a new CEO???

[wholahay]

truth...

either spill or stfu.

I for one am sick of your doom and gloom BS while all the time claiming to give a damn about sbux partners.

[Cut Out The Heart]

The best thing Howard can do is leave Starbucks in the hands of people that are passionate about the brand and not their own ego. I think it would be best for Howard to spend all his time with Mavron. Face it, he has built such an Enron like company by using his Mavron portfolio companies in the Starbucks world. He will get his nickels anyway he can won't he?

[Cali ASM]

"The best thing Howard can do is leave Starbucks..."

Let's leave it at this, shall we?

[Starbucks Defector]

Leave? Interesting. How would that happen? Board is behind him though I do not understand why. Let's see. In his words " I will introduce 6 transformational items that will forever change the industry and bring us "Starbucks" back to what we once were". Well to date how many of those have paid off or changed the industry. Pike Place? Please... After being told that the supplies were not ready to support roll out (leaving out all lc stores 40 % of the us stores) he rolls it because his ego will not let him say no. What an absolute ridiculous NY debut that did not nothing but said "hey look at me" and does anyone rally like to offering (listen to your customers,, oh you did four months later). Sbux card perks, again same as above as it relates to lc stores. Clover? Ah where is it? New espresso machine? Ah where is it? Food offerings? Enough said. BTW love the frozen new items(not). Sbux idea line. When no one is listening then it is just window dressing. I am sure we have all seen how these items have changed the landscape of the industry and for the company. Closing of 600 stores( and we are fooling ourselves if we do not feel that more are on the way), 10,000 partners or jobs eliminated. and when they need to hire again, are they going to pay what the industry average is for all positions. The stock grants use to be a benefit which offset pay, how has that worked out for the 150,000 partners still left over the last 3 years.
Leadership or different voice in Seattle. Who is saying no to him right now? Who would stand up and say no? All the people who would have are gone and the ones in position have all been appointed or brought back by Howard ( gotta love the Arthur rehire).
So I ask, time for him to leave or a need for him to leave? Unless a shareholder revolt happens which is simply unlikely, he will continue to preach about a vision for a company that is simply not possible in this day and time. though he could do it with a little civility and not like a preacher who has done no wrong...

[Cut Out The Heart]

I love that Howard is trying to transform a business but also says he doesn't know the company anymore. Well, Howard, when you were in charge, it was a different company. You are trying to take a company back to what it was however, it is a different company so why not take it to where it can go. Quit hiding behind your rhetoric and be a leader. Offering people hush money (severance) to not out your Cybil like leadership is bogus.

Product and evironment are easily copied, the difference is the people. Rather then manage expenses and reduce costs in inefficient business operations, he cut out the heart of the company by turning on the employees who have done his bidding all these years. People used to put up with the bull because their options were worth a ton of dough, well unless partners have options from 10+ years ago, their options have the same value (or maybe less) then the rolled paper in the restrooms of the cafe.

Oh and the New Orleans conference...all that will end up being is a marketing tool for Howard to talk about. I can already the pictures of him in a hard hat rehabing the lower 9th ward. Bet me that he will only be in the ward long enough to get a picture.

You may ask why I bag on Howard so much, well he violated his personal values and let his HR VP pull the wool over his eyes and use a bogus process to weed out people. Howard did to many employees the exact same thing that happened to his father when he was laid off by his employer after productive years of service. Come on Howard, put down the press clippings and talk to your partners. They will tell you the real truth. Until you do that, the transformation plan is going to fail.

[Melody]

Board is behind him though I do not understand why.

How would you know this? They must be putting a lot of pressure on him right now, I'd assume.


New espresso machine? Ah where is it?
Clover? Ah where is it?
You're referring to the Mastrena: Those are rolling out pretty fast. I've heard reports of Mastrena sightings in Washington, Oregon, and I've seen them in So. Cal. Considering the difficulty and logistics of rolling out something as fundamental as your store's espresso machine, I'd say the roll out is going fairly fast.

And frankly, let's keep the Clover roll out slow. Don't do the stupid move and put it in every single store. Keep it as part of the premier experience, and build some excitement around it - word of mouth. Not every store MUST be identical to the next!

At the Shareholders' Meeting Howard never promised us a Clover coming to every Starbucks store, and I'm very much hoping that that was intentional. It's an important tool ... if lauched judiciously and correctly. Frankly, this is the place where I really wish I could be whispering into Howard's ear saying things like "Do you remember that exquisite Kenya Nyeri Mathira coffee you rolled out with the Clover?? Remember that slice of heaven? If you're ever going to make magic in Starbucks again, your going to do it with that very limited specialty beans that you launch with the Clover. And a limited production, high quality bean, not sold in flavor-lock bags, is never appropriate for ALL 6000 stores. Don't even go there. Don't even think about it Howard."

The best thing Howard can do is leave Starbucks in the hands of people that are passionate about the brand and not their own ego. I think it would be best for Howard to spend all his time with Mavron.

I try intentionally to avoid talking about Howard's personal characteristics because, really, how would I know? I don't know him. What I know is what I read on this board, AND the quick 'first impression' stuff that I have learned from the couple of times that I have run into him at Starbucks stores. I get that there is an ego issue going on, and he might not even be the most approachable guy which would make it more difficult for those around him to be quite frank with him.

However, I think most people who have the drive to make a lifetime gamble and bet over a company that they bought 20 years ago for 3 million, probably have big egos. The two go hand in hand.

The real question is who around the big egos keeps them in check, and whether there's any self-feedback going on. Again, I submit to you, very mild personalties who easily hear "no" for an answer never create the sort of Starbucks empire that we have now.

I'm not suggesting that these are all positive characteristics, but big cheese often seem like they're big egos, in my experience. I'm sure there are exceptions. When Jim Sinegal was born, they broke that mold, and I don't think it's ever been repeated.

It's just that we talk a lot about Howard's ego on this site: And *maybe* there's some truth in it ... but where does it get us by bashing Howard for his ego? When I run into a Starbucks, 2 minutes before close, and say "Hey can I get a xyz?" I really hope that I will be guinely helped and given my drink with normal characteristic Starbucks enthusiasm, and not be made to feel because I'm putting them out because they need to get cleaning the store. I've seen it go both ways there ... but neither of those results have anything to do with Howard's big ego. One is creating enthusiastically satisfied customers, which is a HUGE component of your job, and it probably the promise of Starbucks that makes it different than a fast-food joint; the other is what can drive customers away when they walk out of a Starbucks and say to their friends, "why would I want to go back into a Starbucks? The baristas are always too preoccupied with things other than customers" (we know that's a false statement - there's lots of great customer service going on at Starbucks, but still we don't want people saying things like that).

Oh I have ranted way too long, and it's all been said before anyway.

[Cut out the Heart]

Melody,

Well written post. I would say that Howard has allowed his ego to trickle down into the stores that has had an impact on the partner. How many times after his "no breakfast sandwiches" statements did the Baristas in the stores have to respond to guest questions taking them away from doing good customer service. Now the PR folks are left to say "we never said that breakfast was going away" so as to minimize the negative impact of Howards ego.

True, a certain amount of ego is good as you describe. There is a great book on the topic called Egonomics. Howard is an example of when ego can and will bring down a business unless he leaves. I foresee the Board putting pressure on him to leave the business. He doesn't have anyone around him to question his decisions. The worst thing that could have happened to sbux is for Howard to return. Two words for you...Seattle Sonics.

[Melody]

Two words for you...Seattle Sonics.

I think about that every day. Starbucks is a far more important Seattle icon to me than were the Sonics.

And thanks for the compliment in the post!

Only time will tell ...

[Starbucks Defector]

Melody:
great points. Can I simply put out there one thing. you mention 6000 stores. Like Howard, it seems people forget that 40% of the US market is LC stores and in some cases these stores are the only Sbux for miles and miles. I have yet to hear of another Mega chain (that is what they are) running or implementing new products or promotions for only 60% of their stores. I only quesiton his reasoning and decisions when it comes to the brand. The company is not what it was 6 years ago and these decisions due more to hurt the guest and those stores and the true Sbux customer who visit both locations. All in the name of what Howard wants to do. So i will leave it at that and will let everyone watch for themselves... Leadership in N.Orleans. So how do spin good when so many you have seen over the years and who have given so much are gone and no clear long term plan or direction is evident. Please, don't post that the 6 items from Feb are the future or a plan because the numbers so far and the future looks do not show that they have or will have the desired impact...look forward to the spin out of N.Orelans

[Melody]

Truth, are you there?
Please give me your two cents, because really, this buying and selling of stock just confuses me and I only own stock in Starbucks because I love them.

I just went to my Charles Schwab account and I saw a weird link that I'd never noticed before. I clicked on it, and it is some sort of disclosure of Peter D. Gibbons exercising 62,073 shares of Starbucks stock options.

Is this a good sign? What does this mean? Anything at all? Is this a good sign when Starbucks senior officers are exercising stock options? You wouldn't do that if thought your company was going to tank, would you?

Or am I completely off base here?

*Paging Truth*

[Pat Nerr]

liquidation Melody... he wants the cash.

[Pat Nerr]

it makes me wonder why board members would be buying up shares the last few weeks? I can understand when it hits bottom... but when it's heading upwards... hmmm.

[Melody]

Oh dear.

Webmaster-Jim, Please delete this conversation! That's the opposite of what I was thinking. Silly me!

[Darleen]

Pat you make a really good point. What could that mean?

[Pat Nerr]

who the hell knows... I'm still trying to get someone to confirm that a P&AP partner was silently dismissed after being caught with his embezzlement pants down...

I mean usually they prosecute these things to the fullest extent... especially since money and company cars were involved...

maybe Truth knows something... If only he/she would e-mail me and tell me what's going on... if only...

[jabanga]

i would think a considerable amount of anyone's options are of negative value. this guy must have been a round for a long time if he had 62,000 options that were actually worth anything.

[Pat Nerr]

Gibbons hasn't been around that long... I'm sure when he was appointed, the shares were a couple of bucks cheaper... it was down when he got promoted... now it's up a bit... you do the math on a couple of bucks at 62,000 shares...

total Office Space...

[Melody]

PatNerr, do you have a name? You could do a name search on the Washington courts website to try and see if there has been a county filing (prosecution)?
http://dw.courts.wa.gov/

A 2008 felony criminal filing would look like this - 08-1-xxxxx-x

Whatever you find on that website is public record, otherwise it wouldn't be there.

[Pat Nerr]

yeah... there's no filing. And a manager from that dept. who was around 17+ years is all of the sudden moved on... as far as I remember him saying... he wasn't going until he retired

[truth]

Embezzlement or sexual harassment? It's hard to keep track of all of them.

[Cut Out The Heart]

And to think, this is "Most Admired" Company. Really, embezzlement (not the first time) and sexual harassment. Makes you want to go to work for the graveyard shift at a fast food restaurant in order to be protected.