Jones Soda: On Ice
For Jones Soda (JSDA), the resignation of its CEO and founder Dec. 5 caps a truly extraordinary year.
The upstart soft drink maker began 2007 touted as a great growth company by CNBC stockpicker Jim Cramer and others: Its "alternative" beverages — including the Jones Soda brand, an energy drink and the WhoopAss brand — were going national.
Shares jumped from $12 at the beginning of the year to above $30 by April.
Then reality hit. The nationwide rollout of its canned beverages was more expensive and less lucrative than investors thought. Shares fell by half, and then fell by half again.
Jones Soda's hometown paper, the Seattle Post-Intelligencer, reported in August that five board members and chief executive Peter van Stolk sold $6.5 million in Jones shares when the stock was at its peak. The Securities and Exchange Commission briefly investigated, then dropped the case.
Now, van Stolk is out, stepping down as chairman and chief executive at the end of the year. He said he had planned to step down for months.
"I've worked hard this past year to lay the foundation for future growth with an increased product line and national distribution at the retail level," van Stolk said in a statement.
With van Stolk's departure, the market seemed to breathe a sigh of relief. Jones Soda shares were up 7% in the late afternoon on Dec. 5, trading at $6.36 per share.
PiperJaffray (PJC) analyst Nicole Miller Regan says "Peter was an asset with his entrepreneurial spirit," but Jones Soda now needs someone with managerial expertise to take advantage of its growth possibilities.
It's a good sign, she says, that Scott Bedbury, a former Nike (NKE) and Starbucks (SBUX) executive, is taking over as interim chairman and Stephen Jones, a former Coca-Cola (KO) exec, will become interim CEO. "Those guys are industry veterans," she says.
But Stifel Nicolaus (SF) analyst Mark Astrachan warned that Jones' appointment is a "stopgap and leaves a leadership void at a key time."
Still, Astrachan wrote, "the company could benefit from having a chief executive with managerial experience who can effectively manage the ongoing national rollout of Jones Pure Cane Soda in cans and various other product initiatives."
Now distributing its products to more than 15,000 stores, Jones Soda has been taking on Coke, Pepsi and other big beverage companies. However, van Stolk admitted last month in a statement, "We have not executed as well as we know we can."
Last quarter, total sales increased 27.1% to $13 million, but the firm reported a loss of 6 cents per share, vs. earnings of 1 cent per share a year ago.
Miller Regan maintains that Jones Soda is still a "long-term opportunity." The company didn't meltdown in 2007, she says. Rather, "the stock got way ahead of itself."
Cramer has defended his pick and blamed the company, citing weak earnings for two quarters in a row. "I am frankly shocked at how poorly they are doing," he told the Post-Intelligencer.