Taking Stock- Nobody doesn't like Sara Lee...right?

Dear Mr. Berko:  I've owned Sara Lee since 2005, and the stock has done nothing. What's wrong here? Why has nothing happened to this stock that has so many good products? Please tell me if I should buy 300 more shares to double down, hold my stock or sell it.

H.R., Troy, Mich.

Dear H.R.: There's something organically wrong with this company. The last time I remember a positive opinion on Sara Lee (SLE -- $15.02) was November 2006, when the stock was trading at $23. At that time, Matrix Research issued a solid "buy" rating, and I wondered if the Matrix folks may have been infected with Mad Cow Disease.
   I -- and others on the Street -- can't fathom why a company with so many top-selling brands would, year after year, produce such dismal and disappointing results. Walk the aisles of any drugstore, supermarket or convenience store, and all those shelves are stocked with SLE's bakery products, beverages, meats, body care items, detergents, shoe-care products and insecticides. And all top-quality brands at moderate prices.
   While the first six months of the fiscal years were minimally ahead of expectations, disappointing second-quarter revenues stumbled lower by 2.7 percent year after year. Despite holding leading market positions with many of its delectable, savory and toothsome brands, earnings during the last 10 years have been paralyzed by management's inefficiency and cockamamie operating structure.
   So in early 2005, SLE hired Brenda Barnes from PepsiCo (and it seems PepsiCo was delighted to have her leave) as CEO and chairman. I'm not certain of her accomplishments at PepsiCo, but Barnes immediately commenced a major restructuring program, which did help to minimally grow revenues, but margins continued to decline. Her efforts were basically a dead cat bounce; revenues improved, but earnings continued to founder.
   And just last year, Barnes, with a great internal fanfare, initiated another giant restructuring program to improve efficiency and its cost effectiveness. The changes hardly helped, and some say the strain may force her to leave Sara Lee because of health problems. Her most serious problem is her psychopathic management team, many of whom wouldn't qualify for chief burger wrapper or French fry specialist at Burger King.
  It's quite telling that SLE's revenues and earnings per employee are way below those of Kraft, Unilever, Flowers and Hormel. And it's amazing that SLE, in the last three years, spent more than a billion dollars to buy back 90 million shares of stock. Now SLE's inutile board may be forced to reduce its dividend to preserve cash -- and this is the second time since Barnes took over the helm.
   SLE is a $12 billion revenue company, the iconic products of which should be immortalized in a Norman Rockwell painting. Unfortunately, SLE's doddering board of directors wouldn't know how to pour water from the toe of a boot if instructions were printed on the heel. But those bungling mimes on SLE's board are clueless and should be flushed from their corporate "snivel" chairs.
   I'd not waste investment dollars on SLE because there are too many better fish in the sea. The board needs a Eureka epiphany right away because SLE is becoming dangerously moribund and rigor mortis is beginning to set in. Sell your stock.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com. COPYRIGHT 2008 CREATORS SYNDICATE, INC.


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