Hain Celestial (NASDAQ:HAIN) is also reporting earnings after today’s close.  Analysts are looking for $0.28 EPS and revenues of just under $227 million.  For the coming quarter estimates are $0.28 EPS and $239 million in revenues.  Hain Celestial shares are in the mid-point of its 52-week trading range.

United Natural Foods (NASDAQ:UNFI) is in the spotlight ahead of its earnings this Friday.  United Natural Foods has seen its stock under pressure since the Whole Foods and Wild Oats merger was announced as two key customers were consolidating into one. Analysts expect United Natural Foods to post earnings of $0.34 EPS on revenues of $723.3 million, and next quarter is expected to show $0.34 EPS on revenues of just under $744 million.  This report will also mark the year-end for United Natural.  If it offers fiscal July 2008 estimates, those estimates are $1.46 EPS and $3.141 Billion in revenues.  The best thing about this report is that the forward guidance may clear up much of the uncertainty that has surrounded this stock, and this stock is only about 10% above a key support level that has been in place for about two and a half years.  This one has been overly punished, as shares are down $11.00 from the $38.40 highs over the last year.

Jon C. Ogg
August 29, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Putting the two companies together could result in large savings in public company, management, and back-office costs.

ETFC is trading well down from its 52-week high of over $26. It now sits well below $16. AMTD trades at $16.35, well down from its high of $21.31. The costs of getting customers in a competitive market are rising, and discount brokers are under pressure to cut the costs of trades to keep the customers they have from going to lower-cost providers.

And, there’s the rub with the deal. Just as the government has looked hard at the Sirius (SIRI) merger with XM (XMSR) and the Whole Foods (WMFI) and Wild Oat (OATS) mergers, it may simply nix the AMTD deal with ETFC. A number of smaller brokers could find that they are squeezed out as two of the three largest firms in the industry become one. Operators like Fidelity, Zecco, Trade King, and Options Express will probably raise fair objections.

When it appeared that the Whole Foods merger would go through, Wild Oats’ shares soared. Investors know just how much these mergers mean to price leverage.

Douglas A. McIntyre

Reuters writes that the Whole Foods (WFMI) merger with Wild Oats (OATS) could pave the way for other mergers that are pending.

The Wall Street Journal writes that Countrywide (CFC) has begun to lay off employees involved in originating loans.

The Wall Street Journal writes that crude prices should stay high this year as a strong supply will an abundant supply begins to drop.

The New York Times writes that a slowdown in advertising growth at AOL may hurt the chances for turning around the Time Warner (TWX) unit.

The New York Times writes that Hewlett-Packard (HPQ) has introduced a feature that allows PCs to print documents on almost any printer.

The New York Times writes that business and political interest in Europe are waiting for a September ruling on the EU’s huge antitrust suit against Microsoft (MSFT).

According to the FT, AOL says its slow ad growth is a "hiccup".

Barron’s writes that Sony (SNE) PS3 could face more sales problems due to poor sales of Electronic Arts (ERTS) new Madden NFL .08 for the game platform.

Douglas A. McIntyre

The news move Wild Oats shares up 18% to $18, near their 52-week high. Whole Foods jumped 8% to almost $45.

Rumors are for fools. For starters, over the course of last week, shares in SIRI were down 7%. The stock of its potential merger partner XM Satellite Radio (XMSR) was down 5%. The S&P was down only 1%. The progress of the Whole Foods merger hardly helped the satellite radio combination.

And, the FTC is not the FCC. Nor is it Congress. The objections to the SIRI merger come from the fact that the government licensed the companies the airwaves that allow them to send their signals from the satellite to the customer receivers. It is a monopoly created by the FCC, not by hippies who want to buy organic chow.

The SIRI  merger is still unlikely. Congress has a problem with it because it believes that the price for satellite radio to the consumer will eventually go up due to lost competition. The FCC’s problem is that they hate Howard Stern and will do what they can to hurt him now that they can no longer regulate his content.

All mergers are not created equal.

Douglas A. McIntyre

From Silicon Alley Insider

What do organic grocery stores, online ad giants, and satellite radio companies have in common? Just a bunch of regulators who decide whether to approve mega-mergers like Google’s takeover of DoubleClick, XM’s merger with Sirius, and Whole Foods’ acquisition of Wild Oats…continued here

Reuters writes that Bear Steans (BSC) will cut 240 jobs in its sub-prime operations.

Reuters writes that Nokia (NOK) has filed a complaint against Qualcomm (QCOM)  with the ITC asking for more bans on the import of QCOM chips.

Reuters reports that Wall St. still has doubts about Amgen’s (AMGN) future, even after the biotech cut 12% of its workforce.

The Wall Street Journal reports that Whole Foods (WFMI) won a round in its merger with Wild Oats (OATS) when a judge refused to issue an injuction to stop the deal.

The Wall Street Journal writes that IBM (IBM) will start to sell the Sun (SUNW) operating system.

The Wall Street Journal writes that Wal-Mart (WMT) is considering opening smaller high-end stores.

The Wall Street Journal reports that Sprint (S) may spend $5 billion on its WiMax initiative.

The New York Times writes that Boston Scientific (BSX) will put two more units on the market to bring in cash to pay down debt.

FT reports that buy-out firms are still in the market for deal despite credit problems.

Barron’s reports that Ebay’s (EBAY) Skype VoIP unit was down for a day due to software problems.

Douglas A. McIntyre

According to The Wall Street Journal: John Mackey, chairman and chief executive of Whole Foods, hailed the decision in a statement, saying a combination of the grocery chains "will create long-term value for customers, vendors and shareholders." 

The decision may help embattled Whole Foods CEO Mackey keep his job.

Whole Foods shares hit a 52-week high nine months ago. After reaching $66.25 in October, the stock has been driven down to $41 on mediocre earnings and problems with the merger. After hours, the stock moved up 8%.

Douglas A. McIntyre

The short version is that consensus estimates are $0.33 EPS on $1.54 Billion in revenues.  The company also said it spent $100 million in share buybacks and still has another $100 million that can be spent for repurchases.  The Company also expanded its existing $100 million revolving credit line to $200 million during the quarter.  Whole Foods plans 18 to 20 new store completions this year.

For fiscal year 2007, on a 52-week to 52-week basis, the Company expects total sales growth of 13% to 17% and comparable store sales growth of 6% to 8%.  For fiscal year 2007, the Company expects operating income before pre- opening and relocation costs as a percentage of sales to be in line with its 5.9% results year to date.  Longer term, the Company’s goal is to reach $12 billion in sales in fiscal year 2010.

Shares are now trading up 9% in after-hours trading, and you can bet there is some short covering.  The Mackey blogging issues mostly came up after the cut-off date here on these results, although that is still being deemed more of a stock and corporate issue rather than a brand issue.  The company has said it  expects to receive a court ruling bythe middle of August regarding its proposed buyout of Wild Oats (NASDAQ:OATS).  John Mackey is also the one giving the quotes in the press release, so it doesn’t look like he’s planning on going away any time soon.  So far this report is being very well received despite the ongoing issues over the last month. 

Jon C. Ogg
July 31, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Also, today after the close will be the earnings report for Whole Foods.  Here is our full preview from yesterday.  The short version is that consensus estimates are $0.33 EPS on $1.54 Billion in revenues.  We also had another article yesterday noting how Wild Oats may need to restructure its entire cost structure if the company is not acquired.

Jon C. Ogg
July 31, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

There is another key issue.  We haven’t really heard a peep out of the company in roughly two weeks, and we have ourselves called for at least a partial or temporary resignation or withdrawal of Chairman & CEO John Mackey.  The issue is that he doesn’t really need to leave entirely.  He can maintain his Chairman position as the company’s founder, but this will signal he is at least willing to let the company have a more removed face to deal with regulators over the deal and to deal with the SEC inquiries over the "RAHODEB" message board posts.  After all, he even went on a massive rant and tirade on the Whole Foods Blogs.  What Mackey did was foolish and dumb, but the truth is that the business cycle has changed (thanks to many of his efforts) and the company may need a less-eccentric leader to help it fend off competition from lower-price competitors that sell the same products.

Whole Foods on a results basis is in somewhat of a Catch-22.  Very few are expecting great upside or great guidance.  After all, Kroger (NYSE:KR) and Safeway (NYSE:SWY) are able to offer many of the same exact goods now and for prices at much lower levels.  Don’t take this too much against the company, because the truth is that the company will continue to be profitable and it has already established itself as THE premium brand for healthy and organic foods out of any nationwide chain grocer. 

Regardless of what traditional grocery stores do, its status will remain as the leader and the premium brand.  It boils down to what premium Wall Street is willing to accept, and right now Whole Foods still has roughly a 50% premium to the earnings multiples of Kroger and Safeway.  That may act as a ceiling while either the "E catches up to the P" or while the street determines a fair ‘multiple premium’ for the stock. 

Lastly, the short selling has increased from 19.1+ million in June up to more than 24.4 million shares in July.  That can’t be a surprise considering the latest shenanigans out of Mackey.  But that could also create a major wave of short covering if the company can convey that things are going to be better than OK.  Wild Oats still trades at more than a $3.00 discount to its $18.50 per share buyout price, and Whole Foods is only about 3% above its most recent 52-week lows.

Jon C. Ogg
July 30, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.