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Subject:  Re: A KO w/o CCE? Date:  8/11/1999  9:17 AM
Author:  canucanoe1 Number:  12941 of 36635

McLaus: Thanks for the note.

I just thought that a multi-part review of KO was not just fluff, but flawed. How can you do a valuation of KO without discussing this relationship and its history? KO spun out low performing assets to the public, and kept the gravy AND control.

There was an interesting article in the NY Times this year that reviewed this. I believe this article stated the early years KO received significant $$ from CCE, but now it is the other way around. Also, when KO was sending $$ to CCE, their accounting did not treat this as "operational" costs, but as some sort of "investment" or one time payment (funny how the direction of flow changes the type of payment?) As for the Motley Fool, they should review this and rewrite the piece on KO. Maybe the conclusions will be the same, but I do not think so.

Everyone is viewing KO as damaged goods because of the Europe scare and the Cadbury and Orangina purchase problems. But some thought needs to go to operational issues, which have at the heart of them CCE.

As for PEP, I don't blame them for copying Ivestor's financial structure. He's a smart man - as anyone who can tap into other people's money should be seen as. It worked in the early years. But most strategies work early. It's intermediate and late years that most investors must be concerned with.

Personally, if Buffet was not an investor here, I do not think the market would be so kind to KO. As for PEP, they may reap the same ramp-up as KO did just after the bottler spin out. Nothing like OPM for a short term boost.
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