Taking Stock: Kimberly-Clark's may need changing

Malcolm Berko: KMB is Old Navy, golden retrievers, “Leave It to Beaver” and a fixation on lawn care, bad chardonnay, equally bad espresso, golf, soccer moms and SUVs. For too long, this company has been run by a fraternity of fallow managers.
By Malcolm Berko Published: January 27, 2013
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That the shares trade only 4 points higher than they did in 2000 suggests Kimberly's white-bread management team can't figure how to pour water from the toe of a boot with instructions printed on the heel.

KMB's new direction, a program cleverly named FORCE (Focus on Reducing Costs Everywhere), is supposed to grow profits by reducing costs. Management and the board of directors are so enthralled over FORCE that some are emerging from their office caves and gathering in circles like excited Neanderthals who just discovered fire. But the major reason for FORCE is that Vanguard Group, which owns 30 million shares, and a committee of disappointed and prominent shareholders had “come to Jesus” meetings with management. And KMB's white-bread boys — fearful of losing their rich sinecures, their community status, their personal perks and their corporate jets — may have seen the light. Time will tell.

KMB is not just Huggies, Depends and other personal stuff. Its 53,107 employees also produce billions of dollars of medical devices, infection prevention products, operating room medical supplies, pain management systems, feeding systems, liquid and air filtration systems, and various supporting products. The consensus believes that revenues will grow 2 percent in 2013, to $21.4 billion, that earnings will increase 6 percent, from $5.22 to $5.58, and that the dividend will increase 4 percent, from $2.96 to $3.08, plus modest gains in the following years.

However, if Messrs. Falk, Buthman, Abernathy and Mielke (KMB's four hotshots) fail to deliver traction, these pretty boys and their sycophants may have to pay their own club dues at Preston Trails — because corporate rigor mortis may have set in after a decade of slovenly management. It may be too late. Morningstar seems to agree and gives KMB only two stars out of five.

Put your bonus money in 30-year Treasury inflation-protected securities.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com.

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