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Buffett Leaves Coke to Focus on Berkshire MoneyNews
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Warren Buffett has sat on the board of Coca-Cola for 17 years, and he's been a loud and proud advocate of the beverage behemoth's stock every step of the way. But the billionaire investor is now parting ways with the company after resigning from the firm's board of directors on Tuesday. Bloomberg reports that Buffett stepped away because he wants to spend more time managing his own company, Berkshire Hathaway Inc., which holds 200 million shares - or an 8.4% stake - in Coca-Cola.
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And now some investors may want to read between the lines to find some justification for turning sour on the company. "Coca-Cola shares have fallen in four of the past five years, as it has struggled to diversify beyond soda, which accounts for 80% of revenue. After Buffett bought the stock in 1989, Coca-Cola shares rose for 10 consecutive years. Investors have sold the shares in the last several years as rival PepsiCo Inc. has grown sales faster by focusing on noncarbonated drinks." The Oracle of Omaha's departure comes on the heels of a barrage of disappointing news that has plagued Coca-Cola. Last December, PepsiCo beat Coke in market capitalization for the first time ever. Bloomberg says that PepsiCo, the world's second-largest soft-drink maker, now has a market capitalization of about $95.56 billion, while Coca-Cola's is about $96.93 billion. Editor's Note:
2. Google Stock Tanks, Rivals Gain Ground Barron's is the latest to take a swing at Google, which saw its stock slide by 5.7% after the financial daily said it expected the company's stock to fall by 50% in the next year. On the Nasdaq stock market, shares of the company fell $15.93 to $346.68 on Tuesday. Google's stock market value has declined 16% since the Jan. 31 earnings report. The Mountain View, Calif.-based company missed analysts' expectations during the last quarter and has lost roughly $21 billion in market value since releasing its latest earnings report. Bloomberg notes that the pack is breathing down Google's neck, as Microsoft and Yahoo ready their own ramped-up Internet search engines. Yahoo is building a more advertising-friendly Web search hub, while Microsoft is kicking off Windows Live Search and adCenter, which allows advertisers to place their ads on the company's MSN portal. Meanwhile, other factors are nibbling away at Google's market share. The company has felt the sting of lower ad rates on the Internet and has suffered from "sting fraud" - which occurs when Web users fraudulently click on ads to artificially inflate the cost of a competitor's advertising. "Google's market value had soared to $128 billion, exceeding that of Coca-Cola Co. and Cisco Systems Inc.," says Bloomberg. "The stock, which reached a high of $475.11 on Jan. 11, had risen fivefold since the company went public at $85 a share, making billionaires of its founders and enriching employees and early investors."
At the time, Google was riding high, having exceeded analyst expectations for the past five quarters. But now growth has slowed and investors are beginning to notice. But not everyone is writing Google off. "Google is a company like all others that's run by human beings, and there will be missteps along the way," New York-based Standard & Poor's analyst Scott Kessler told Bloomberg yesterday. "I haven't seen much that demonstrates to me that outside of Internet search advertising the company has the prospect of being dominant." Editor's Note:
3. Expert: China to Dominate 21st-Century Investing China will be the place to go for portfolio growth over the next few years, according to a report in The Royal Gazette, Bermuda's only daily newspaper. Jim Rogers, who co-founded the Quantum Fund with George Soros, was visiting the British territory, where he gave a speech at the Society of Bermuda's Fifth Annual Forecast Dinner last week. He noted that "China is going to be the next great country whether we like it or not, and the 21st century is going to be the century of China. They call themselves communists in China, but they are among the world's best capitalists," the newspaper reports. Rogers, who lived in China from 1999 to 2002, says that the country is huge, with a booming middle class that sets the tone for the nation's economic growth. "In China they save and invest over 35% of their income and they are willing to work as hard as necessary to live the way we do, and the single best advice I can give you is to teach your children and grandchildren Chinese." So where should one invest in China? Roger says that raw materials and natural resources are a good bet. "Commodities have been the best place to be for quite a few years now, and if you are going to diversify, the best thing to have is some commodities," he told the Bermudan audience.
"In most parts of the world in 2006, you don't drink the water, so investment lesson No. 1 is that anybody who can come up with a solution to the world's water problems is going to be unbelievably rich."
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