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Primo Water Corporation released their Second Quarter 2012 numbers and to say the least the stock market nor the analyst were impressed. The stock hit a 52 week low by breaking the $1 mark trading as low as 0.96 before recovering by the end of the week to $1.20. Primo did report advancing water and dispensers sales however took almost a one million dollar loss on it’s Flavorstation product, a carbonated flavored water dispenser.



Since it’s IPO the stock has not any major upswing in price and gone nowhere but down since August 2011. It continues to face strong pressure as analyst have not been impressed and even made a rather negative comment during the conference call which is all but unheard of.  In reference to Prim’s comments during the conference call that Primo was going to concentrate on it’s core water business through the dispensers and refill locations analyst Jim Duffy responded, “I look forward to that flawless execution, because we haven’t seen it yet, Billy.” Primo also still faces a Class Action by investors claiming the company or it’s executives made false and misleading statements about the company’s financials.

The Complaint names Primo Water, certain of its officers and directors and the underwriters of the Offerings as defendants and alleges they have violated the Securities Act of 1933 and the Securities Exchange Act of 1934. The Complaint alleges that during the Class Period, defendants’ positive statements about the Company were lacking in a reasonable basis of fact and were materially false and misleading when made. Specifically, (a) neither demand nor sales of the Company’s products were as robust as represented; (b) stores owned by the Company’s largest retail customers did not carry the Company’s products so the Company was not generating any revenue from those locations; (c) the Company’s growth and business prospects were heavily dependent upon the ability of the Company’s two largest customers to sell products from other, unrelated companies before those customers would order products from Primo Water; (d) the Company’s primary retail customers would not be in position to order any of the Company’s products until after those retail customers cleared out other inventory sitting on their shelves, including inventory related to products sold by competitors to the Company; (e) the Company’s largest retail customers had delayed promotions of the Company’s products, which negatively impacted the Company’s sales; (f) the Company’s growth rate had slowed and would be slower for the rest of 2011, if not beyond; and (g) the Company would not meet the financial guidance it provided to investors.


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In a spat over money Time Warner has dropped WXII from your cable lineup. If you did not notice on Tuesday WXI was replaced by WBRE out of Wilkes-Barre, PA. This boils down to Time Warner being unable to negotiate a new contract with Hearst Television over rebroadcast fees. Time Warner of course says the fee increase wanted by Hearst is unreasonable while Hearst says it is inline with cost and other contracts they have.

If you have a digital TV with a Digital TV Antenna you may be able to watch WXII “over the air” but due to the changes from old school TV signals we have used for decades to the new digital spectrum your reception could vary greatly depending on where you live. Digital signals do not travel as far and are very line of sight so putting a small digital antenna on that basement TV is probably not going to work. The other problem is most TV’s must be set to “cable” or “antenna” requiring you to switch your TV to antenna, search for channels then finally view the available channels and repeating the whole process when you switch back to cable.

Of course now we have Nexstar Broadcasting which owns the Wilkes-Barre station is now saying Time Warner has misappropriated their broadcast and is threatening to take action against Time Warner for using it’s signal for viewing in the Winston-Salem market. One has to remember who gets to view what content is governed by a host of contracts between the various cable, TV, broadcasting companies and so forth. Just because WBRE is an NBC affiliate does not mean the money has changed hands to allow another market (Winston-Salem) to view a professional basketball game being broadcast in Pennsylvania’s market. There are other money considerations right down to the commercials being broadcast, those drug advertisements are very targeted to specific markets and they pay huge sums of money to air their adverts to specific, agreed upon market segments, do they get a free ride to now be broadcast in Winston-Salem or does the rebroadcasting of the Wilkes-Barre station require new contracts. These are the types of things being discussed and argued in these negations and in the meantime local citizens are in general unable to view local content and news.

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If anyone would like to explain this one to me I am all ears.

Consumer Confidence In U.S. Fell In May To Four-Month Low

May 29, 2012 4:13 PM ET

The Conference Board’s index decreased to 64.9 this month from a revised 68.7 in April, figures from the New York-based private research group showed today. The decline in the Conference Board’s measure is in line with readings from the Bloomberg Consumer Comfort Index. The share of Americans expecting fewer job opportunities in the next six months climbed to the highest level since November, raising the risk that consumers will limit spending. A 30-cent decline in gasoline prices since early April failed to brighten spirits, showing that more progress is needed in the job market. Homebuilders are reporting their most-improved spring selling season in seven years, propelled in part by record-low mortgage rates. At the same time, the market faces challenges as mortgage credit is difficult to obtain and slow wage growth is keeping some would-be buyers on the sidelines.

But wait didn’t I just read the week before the opposite was true?

Consumer Sentiment In U.S. Climbs To Highest Since 2007

May 25, 2012 4:59 PM ET

Consumer confidence rose in May to the highest level since October 2007 as Americans became more upbeat about the prospects for employment.

The Thomson Reuters/University of Michigan final index of sentiment climbed to 79.3, the ninth straight increase, from 76.4 the prior month. The gauge was projected to hold at the preliminary reading of 77.8, according to the median forecast of economists surveyed by Bloomberg News. A record number of households said they’d heard better news on the jobs outlook, which combined with cheaper gasoline and an improving housing market may help sustain consumer spending and shield the economy from Europe’s debt crisis.

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Novant Healthcare announced they will be laying off roughly 300 employees with 150 of those cuts coming to Winston-Salem. The primary losses will be at Forsyth Medical Center in “non-clinical” positions while around 20% will be in positions that directly interact with patients.  Novant cited a drop in healthcare use during the recession as well as declines in reimbursement for services provided. Overall Novant has seen a dramatic cut in it’s income of $45 million in the past year.

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Well actually it’s more to do with William Rodgers the former owner of PACE Airlines if that is even true considering the last I heard the bankruptcy administrator wasn’t sure who owned PACE Airlines. Anyway back to the subject. A hearing was held in Forsyth County Superior Court by Judge Edgar Gregory to postpone the case of William Rodgers until April 16th as he has released his prior attorney Walter Horton Jr. and hired Mark Calloway out of Charlotte.

Rodgers was arrested for failing to pay group health insurance premiums for PACE Airline employees in September of 2009 and has been out on Bond since then.


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I will not pass judgment but as a quick note a Wake County Grand Jury indicted three former Perdue campaign workers for filing false campaign reports and obstruction of justice. You can read the story elsewhere but the basics are Juleigh Sitton of Morganton, former the director of the governor’s Western Office in Asheville; and Trawick H. "Buzzy" Stubbs Jr. of New Bern, a former law partner with Perdue’s late first husband were each charged with one count each of filing false campaign reports and obstruction of justice. Former Perdue campaign finance director Peter Reichard of Greensboro was charged with one count of obstruction of justice.

Charges stem from misreporting of campaign flights, hmm where did we hear that one before, as well as not disclosing Sitton was being paid an additional $32,000 — $2,000 a month for 16 months — to work full-time for Perdue’s campaign with money funneled through a banking firm operated by Reichard called Tryon Capital Partners.

Perdue did not comment directly but referred to her statement on the investigation:

"I will, however, reiterate what I made clear at the beginning of the investigation, and what the investigation has confirmed: as a citizen, a candidate for public office, and an elected official, I have strived to follow the rules and laws,"


Comments No Comments » out of Boca Raton, Florida but with an distribution warehouse here in Lexington, North Carolina seems to not have a very accurate sales tax calculator. In fact it appears that it is so bad that they are routinely charging upwards of 10.9% Sales Tax for items shipped to Charlotte and over 10% for other various North Carolina zip codes.

Background: is a vitamin and nutrition supplement online retailer out of Boca Raton, Florida. Vitacost sells national label items as well as items made for their own label using a distribution warehouse built in Lexington back in 2007 with expansion made possible in part by both local incentives as well as $450,000 from One North Carolina Fund in 2010. Listed as VITC on NASDAQ the stock is thinly traded and has remained in the $4.50 to $5 range since it was halted back in December of 2010 after disclosure by the company that it’s financial statements dating back to 1994 were unreliable. Legal action was taken by a group of share holders in 2010 claiming that certain Company officers and directors had “breached their fiduciary duties and unjustly enriched themselves.”

In reviewing a purchase I made with Vitacost I noticed the sales tax rate did not seem to add up and in doing the math I came up with a charge of just over 9%. I then pulled up older orders and found the sales tax rate charged had been incorrect on orders dating back for a year. I emailed the company about the errors and was told that yes they agreed the wrong rate had been charged and if I would provide background information on the orders they would take care of it. I did exactly that but I also stated I was not satisfied with the answer as it appeared this was not a single occurrence and that it looked like the company was charging the incorrect sales tax rates for all North Carolina residents. Needless to say I got no response and didn’t pursue the matter as we were talking about $3-4 so it really wasn’t worth my time. With several months of no response I decided to check their website again and not only were the sales tax rates incorrect but they had gone up to 10.2%! I again emailed the company stating I had pulled the computed sales tax rates for multiple counties in North Carolina and had found not only have they not refunded any money to me but continue to charge an incorrect sales tax rate, of course again I got no response.

So this time I decided to waste a little time and pull some information together for future reference and since I had that info I might as well post it here as well. Using zip codes pulled from and Sales Tax Rates from I attempted to checkout using an address based in each of the following zip codes and found the corresponding tax rates being charged by on a $10 item.

City/Zip Code Sales Tax Rate Vitacost Computed Rate
Charlotte, NC  28209 7.25% 10.9%
Winston-Salem, NC  28607 6.75% 10.2%
Raleigh, NC  27601 6.75% 10.2%
Wilmington, NC  28401 7% 10.5%

To show I am not just making this up below you will find the checkout form for each of the above zip codes. Does this look like a “math” error to you?



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Two reports are out and cited in the Winston-Salem Journal this week state it will be three to four years before unemployment in the Triad area returns to pre-recession levels. I won’t repeat the quoted findings The Journal quotes, you can read them here, but I do question any such report. There is a clear exodus from the Winston-Salem area. This exodus may help lower unemployment rates by simple adjusting the numbers of employable workers but it is a major drain on the pool of skilled employees. This in turn reduces the area’s outlook for generating new jobs as businesses look elsewhere with lower taxes as well as a better educated and trained work force. If you don’t think that is what happens then look at this quote I will take from the paper by a senior economist at Wells Fargo Securities.

"We believe a large proportion of today’s high unemployment is structural in nature, resulting from a huge skill mismatch between the jobs being created and the existing skill sets of jobseekers," said Mark Vitner, a senior economist with Wells Fargo Securities.

Winston-Salem Journal, July 15, 2011

As I have stated in the past with a shrinking business climate and fewer worker bees you will see a general drop in revenue generated for the local governments. This will result in those governments being required to drastically cut budgets and that means laying off more workers, granted we could do with some trimming of public employees around here. Those cuts however won’t be enough to meet deferred cost on expenses the city of Winston-Salem has taken on such as the Baseball stadium and surrounding obligations or plans for a downtown rail line. As the city will have to meet those obligations the only way to do it in a generally smaller and smaller revenue pool is to raise tax rates. Raising taxes on a workforce that is already leaving the area due to high unemployment will just exacerbate the situation in my opinion and in general delay but not solve the problem. As people are taxed more, see fewer opportunities there is a delay in the ultimate leaving of those workers for other areas of the state or country but it is only a delay as they make those plans, it does not stop the migration or the ultimate result.

Maybe it’s time for The Chamber, The Mayor, Winston-Salem Business Inc., Winston-Salem Alliance to stop chasing “Boys of summer” dreams and start wondering why small business after small business is moving outside of the Winston-Salem area or how a almost 43,000 square foot building set empty for TWO YEARS in a prime retail location? By the way I am speaking of the old Circuit City building on Hanes Mall which finally sold in May to a developer who plans to repartition the location into a multi-tenant space.

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