marmar (1000+ posts) Wed Jul-02-08 09:20 AM
Profiting off the misery of others....Starbucks shares expected to rise on plan to cut staff
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Starbucks May Rise on Plans to Cut Staff, Stores (Update1)
By Joseph Galante and Duane D. Stanford
July 2 (Bloomberg) -- Starbucks Corp. rose in early U.S. trading after the coffee retailer, which has doubled in size since 2004, said it will cut 7 percent of its workforce and close 600 stores.
Howard Schultz, the 54-year-old chairman who fired his chief executive officer in January and took over the post himself, is opening coffee shops at a slower pace and shutting unprofitable stores as he tries to recapture the charm he says Starbucks lost amid a rapid expansion that often put two or more locations within eyeshot of each other.
Investors are likely to respond positively to the cutbacks because they signal Starbucks is coming to grips with its ``overgrowth,'' said Matthew DiFrisco, an analyst at Oppenheimer & Co. in New York.
``They're basically the victim of their own success,'' DiFrisco, who recommends buying Starbucks stock, said yesterday. ``They've admitted that'' by closing 600 stores, he said.
Starbucks, whose shares have plummeted more than 50 percent in the past two years, rose 4.7 percent to $16.35 at 8:51 a.m. before the start of Nasdaq Stock Market composite trading.
The chain said yesterday it would eliminate as many as 12,000 jobs as part of the closings. The cuts include full- and part-time employees and will happen over the next nine months, the Seattle-based company said in a regulatory filing. .....(more)
The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601213&sid=axY