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Leigh Baldwin & Co.

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Diamonds and Dogs

8/6/12

Tyson Foods Inc. (TSN)

Tyson Foods got burned today, down 8.05% to $14.16. The company saw its shares plunge after the latest earnings report fell short of analysts' estimates. For the fiscal year, the company lowered its revenue estimate by $1 billion and now expects $33 billion. Third-quarter profit fell 61% amid $167 million in early debt-extinguishment charges as the meat processor continued to have challenges at its beef and pork businesses, as well as rising grain prices. CEO Donnie Smith said, "Grain costs have been increasing significantly and rapidly, largely as a result of the ongoing U.S. drought. While we ultimately expect to pass along rising input costs, these costs, coupled with continued soft demand, are likely to pressure earnings in 2013." It looks like investors have lost their appetite for Tyson Foods.

Best Buy Co. Inc. (BBY)

Best Buy Co. was one of the best buys today, up 13.32% at $19.99. The company saw its shares pop after the founder and previous chairman (stepped down in June), Richard Schulze, offered to buy the company for $24-$26 per share. Credit Suisse Group is confident that it could obtain the financing for the offer, which is estimated to be around $8.5 billion. Schulze, who held more than 20 percent of Best Buy as of June, plans to contribute $1 billion in equity from that stake. Furthermore, Schulze is hoping to have the board allow him and other private equity firms to do due diligence and review non-public information. The private equity firms would have to invest around $3.5-$4 billion. If Best Buy is sold at $24-$26 per share, it would be at a 36% premium to Best Buy's share price on August 3rd.
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