ATLANTA (AP) _ While investor uncertainty continued to hit the stock of Coca-Cola Co. hard Thursday, some analysts are saying that the company remains a good choice for people who invest for the long term.
Coke has suffered through three tough years and Wednesday said it was eliminating 6,000 jobs _ more than one-fifth of its work force.
Coke shares fell $3.56 Thursday to $59.50 on the New York Stock Exchange, putting its loss for the past two days at nearly 10 percent.
Still, Phil Larkins, who manages money for wealthy clients at Atlanta-based Legacy South, said none of his clients have called him about getting rid of their Coke holdings.
``Given the premier global distribution network they have, and given the fact that it’s the No. 1 recognized brand name in the world, it still has a certain comfort level for long-term investors,″ Larkins said Thursday.
In fact, Douglas Lane, an analyst at Merrill Lynch & Co. in New York, said he is encouraging investors to buy Coke stock now _ not only for its long-term potential, but because he expects Coke to bounce back soon.
Lane said the job cuts put Coca-Cola back on course after nearly two years of falling profits and image problems. He expects a more efficient Coca-Cola to resume its strong growth toward the end of this year and into 2001.
``This is not the time to be looking in the rear-view mirror at Coke,″ he said.
But there is still some uncertainty at Big Red. Incoming CEO Doug Daft indicated that long-term growth goals have been too ambitious, and the company will not give details on its new strategic plan for another six months.
Without some further clarity from the company, short-term investors are likely to stay away, analysts said. That could come as early as Friday, when Coke executives travel to New York for a briefing for analysts.
The company suffered a string of setbacks during the last 18 months, including a severe economic downturn in Asian markets, a discrimination lawsuit filed by a group of minority employees and a costly product recall and two failed takeover bids in Europe.
The largest job cutback in Coke’s 113-year-history, announced Wednesday, will affect 2,500 positions at the company’s Atlanta headquarters, 800 elsewhere in the United States and 2,700 outside the country.
The reorganization is aimed at reducing control from Atlanta and giving more power to managers around the world. Some stock analysts said the job cuts were a tacit admission by Coke that it had become bloated and overinvested in some markets.
Coke estimated that the job cuts will save $300 million a year, but said earnings would be reduced by $800 million before taxes this year to the cover costs of the realignment.
Tim Swanson, an analyst for A.G. Edwards in St. Louis, said the job cuts will let the company react more efficiently to changes in the global economy. He said its stock price will improve as the economy improves in other parts of the world.
``Their bottom line performance is very tied to the global economy,″ Swanson said.
The move may have been good for investors, but it hit employees hard.
``There’s very low morale and a lot of questions,″ Coke employee Camille Martin said Thursday outside the company’s gated compound. ``There’s a lot of fixing up this company has to do.″
Ms. Martin voluntarily turned in her resignation notice two months ago, but said her co-workers in the accounting department will not find out who loses their jobs for another two weeks.
Even though Coca-Cola is one of Atlanta’s most prominent companies, the job cuts should not hurt the booming local economy, said Don Ratajczak, director of economic forecasting at Georgia State University in Atlanta.
``How significant is this layoff to Atlanta’s economy? Psychologically, it’s huge; economically, it’s small,″ Ratajczak said.
Coca-Cola barely sneaks into the top 20 employers in the city, Ratajczak said.
In the last 12 months, Atlanta created 115,000 jobs _ more jobs than all of New England created in the same time period, Ratajczak said. With an unemployment rate of only 2.6 percent, the displaced workers from Coke should have little trouble finding jobs.