Stock Price Update

The stock price for MCD closed today at $77.48 which is down -$1.28 (or -1.63%).

http://www.google.com/finance?q=mcd

It appears that several stocks took a hit today due to speculation over the Federal Reserve.  The following excerpt was taken from an article on tradershuddle.com:

"The market started in negative territory after the Wall Street Journal reported that the Fed is likely next week to unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months; this measured approach would be less aggressive than what the currency and equity markets have been pricing in, boosting the bearish sentiment."

http://www.tradershuddle.com/20101027105548/Stocks/most-stocks-fell-on-fed-ease-doubts-dow-leaders-mrk-mcd-aa-hpq-xom.html

JUST FOR FUN TRIVIA ANSWER:

Only Lucian took a venture to guess how many sesame seeds are on a McDonald's bun.  Well, Lucian you were a bit off as there are approximately 380 seeds on a McDonald's sesame seed bun.  Yes, that is what their website claims... 380.  Surprised me too! 

Earnings are IN and Quite Good!!!

As promised McDonald's released its' 3rd Quarter Earnings today.  The numbers were quite good and some areas of interest listed on the McDonald's Investor Page are:

"Global comparable sales increased 6.0%, with the U.S. up 5.3%, Europe up 4.1% and Asia/Pacific, Middle East and Africa up 8.1%

Consolidated operating income increased 8% (11% in constant currencies) over the prior year

Diluted earnings per share were $1.29, up 12% (15% in constant currencies) over the prior year

Returned $1.4 billion to shareholders through share repurchases and dividends"

http://phoenix.corporate-ir.net/phoenix.zhtml?c=97876&p=irol-newsarticle&ID=1485461

The good earnings report had a positive impact on the stock price as MCD closed today at $78.44 up $1.03 (or +1.33%).  Huge daily gains over yesterday's close.

http://www.google.com/finance?q=mcd

Mickey D's exceeded Mr. Kalinowski's prediction (see my 10/18 post) of third quarter earnings per share estimate of $1.27 by posting actual figures of $1.29 per share.  Way to go McDonald's!!!

JUST FOR FUN TRIVIA QUESTION:

Now, please don't go looking for the answer, just take an educated guess...

Approximately how many seeds do you think are on a McDonald's Sesame Seed Bun???

Make your guesses, and I'll give the correct answer on the next post and we will see who gets the closest. 

Stock Update on Eve of 3rd Quarter Earnings Report

MCD peaked today at $78.13, before finally closing at $77.41 which is up +$0.42 (or +0.55%). 

http://www.google.com/finance?q=mcd

Based on the $0.42 increase from yesterday, it looks like Joe Investor is expecting good 3rd quarter returns tomorrow.   Until then...

Earnings Update

McDonald's will release its' 3rd quarter earnings on October 21st.  It will be aired on their conference call webcast at 10:00 a.m. Central Time.  You can listen via the link below:
   http://www.aboutmcdonalds.com/mcd/investors/webcasts_podcasts/3Q10_Earnings_Conference_Call_Webcast.html

Analysts believe MCD will report higher earnings than initially forecasted.  Janney Capital Markets analyst, Mark Kalinowski, raised his third quarter earnings per share estimate by 2 cents to $1.27.

http://www.forbes.com/feeds/ap/2010/10/18/business-specialized-consumer-services-us-mcdonald-apos-s-analyst-note_8021286.html?boxes=financechannelAP

MCD closed today at $77.32 down -$0.16 (or -0.21%). 

http://www.google.com/finance?q=mcd

We will have to wait until Thursday to see how the announcement will affect the stock price, and also to see if Mr. Kalinowski's predictions are correct.

McDonald's Acquisitions

Between 1998 and 2000 McDonald's acquired Donato's Pizza, invested in a Chipotle Mexican Grill, and acquired Boston Market.  It acquired Boston Market after its' parent company, Boston Chicken, Inc. filed Chapter 11 Bankruptcy and began a restructuring process.  The Boston Market acquistion was in 2000 and cost McDonald's Corporation approximately $174 million.  Of the 751 Boston Market restaurants acquired in the purchsase, some would continue as Boston Markets, while others would be converted to McDonald's, Chipotle Mexican Grills or Donatos Pizza restaurants.  This acquistion was part of McDonald's Corporation's domestic growth plan. 

 http://www.allbusiness.com/retail-trade/food-beverage-stores/385486-1.html

In 2006, McDonald's Corp. fully divested its investment in Chipotle Mexican Grill. 

http://phx.corporate-ir.net/phoenix.zhtml?c=194775&p=irol-newsArticle&ID=916004&highlight

McDonald's may be wishing they had waited to divest those shares of stock as Chipotle is currently trading on the NYSE for $181.87.

http://www.google.com/finance?q=NYSE%3ACMG

The acquisition of Donato's Pizza in 1999 cost McDonald's Corp. $150 million.  However, it divested that company as well by selling it back to the original owners, the Grote family, in 2003.  The amount of the sale was undisclosed.

http://www.buyerzone.com/professional_services/franchises/rbic-second-act.html

And, finally, McDonald's sold the Boston Market chain to Sun Capital for an undisclosed sum in 2007.

http://www.usatoday.com/money/industries/food/2007-08-06-boston-market_N.htm

With the sale of Boston Market, McDonald's had divested all its' other ventures by 2007 and decided to get back to the basics and focus on its' primary hamburger chain.  As MCD appears to be doing quite well these days, it seems that divesting all other interests and focusing on its' core competencies has proven to be a successful strategy for MCD.  

Mickey D's... BIG in China

McDonald's has been in China for more than 20 years now.  It currently has more than 60,000 employees in more than 1,100 restaurants in mainland China and plans to expand to 2,000 outlets in three to five years.  It has expanded to the point that McDonald's has opened a Hamburger University in China to help with sustainability of employees and management.  

According to Tim Fenton, the company's president for Asia, Pacific, Middle East and Africa, China is McDonald's Inc.'s, fastest-growing global market.  Additionally, he said the country's $300 billion-a-year "informal eating out" market is expanding at an annual rate of 10 percent, compared with 2 to 3 percent in the United States.

http://www.msnbc.msn.com/id/36095820/ns/business-consumer_news

McDonald's has a website for its' Chinese market of which I have listed below.  If you can read it... then BRAVO to you and I am highly impressed!

http://www.mcdonalds.com.cn/

China is yet another example of McDonald's success.  Its' global markets are a large contributor to its' financial growth of late.  Today MCD closed at $75.58 down just -$0.01 (or -0.01%).

http://www.google.com/finance?q=mcd

JUST FOR FUN FACT:

How many pounds of french fries do you think McDonald's serves each day???  Well, according to their website McDonald's serves approximately 9 MILLION pounds of fries per day!  Wow, I bet that makes Mr. Potato Farmer very happy!!!

McDonald's and Outsourcing

In 2010, McDonald's extended an agreement with Xerox-owned Affiliated Computer Services (ACS) to manage its' IT services.  ACS specializes in this sort of work and McDonald's has obviously found it to be the best situation for them, as they extended this agreement for another five years after having already utilized ACS for six years previously.  Additionally, by outsourcing IT, MCD can put its' focus and efforts on its' core compentency of providing affordable fast food.

http://www.computerweekly.com/Articles/2010/01/27/240097/McDonalds-commits-to-outsourcing-for-11-years.htm

STOCK PRICE UPDATE:  MCD closed today at $76.10 (nice!) that is up $0.24 cents (or 0.32%).

http://www.google.com/finance?q=mcd

Which Generic Strategy does McDonald's Use?

I would have to say that of the generic strategies listed in our text, McDonald's appears to employ the Low-Cost Provider Strategy as its' primary strategy.  I say this as the price competition among rivals is very vigorous, and products among rivals are fairly identical.  However, of late, McDonald's has also begun employing a product differentiation strategy by marketing new and innovative products with its' McCafe offerings, new snack wraps, etc. 

These strategies are continuing to work for MCD as today's stock price closed at $74.95 up $0.03 (or 0.04%).

http://www.google.com/finance?q=mcd