Coke Went Flat as the Dow Fell Slightly


Mark off today as yet another day during which bulls and bears fought a game of tug-of-war to a near draw. After overcoming early fears about global economic sluggishness, the latest big buyout announcement gave investors some of their optimism back. By the close, the Dow Jones Industrials had cut their losses to just 10 points, while the S&P and Nasdaq actually gained on the day.

Coca-Cola didn't manage to recover much from its lows of the day, falling about 1%. After somewhat lackluster earnings earlier in the week, Coke got the bad news today that rival PepsiCo managed to top analyst estimates in its quarterly report. Although Pepsi's revenue fell slightly from the year-ago quarter, net income jumped 17%, as the company got good returns on its investment in advertising and marketing initiatives to differentiate its beverage and snack brands from its competitors. For Coca-Cola, the news means that it will have to redouble its efforts to maintain its No. 1 brand presence, and seek new avenues for growth. PepsiCo stock rose 1%.

Elsewhere, Windstream dropped 7%. Rival CenturyLink made a surprise dividend cut, along with posting weak guidance in its quarterly report. The move slashed more than 25% off CenturyLink's quarterly payout, and 22% off its stock, and sent ripples throughout the rural telecom space. With so many investors in Windstream, CenturyLink, and other telecoms seeking high dividend yields, the threat that payouts could fall could lead to a wholesale exodus from the space.

Finally, UIta Salon dropped nearly 12%, after CEO Chuck Rubin unexpectedly resigned to head up privately held Michaels Stores. Despite announcing that same-store sales rose 8% on a 30% jump in revenue for the fourth-quarter, Ulta has made investors nervous, with Rubin's departure following CFO Bruce Hartman's resignation in October.

Will Coke lose the Pepsi challenge?
There is absolutely no question that Coca-Cola has been great to long-term shareholders, but today's news confirms the new threats to its continued market dominance. We've recently compiled a premium research report containing everything you need to know about Coca-Cola. If you own or are considering owning shares in the company, you'll want to click here now and get started!

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Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, PepsiCo, and Ulta Salon. The Motley Fool owns shares of PepsiCo and Ulta Salon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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