The turmoil in Greece is draining confidence in the 17 countries that use the euro. Borrowing costs are up for the most indebted governments. Depositors and investors are fleeing banks seen as weak. Unemployment is soaring as recession grips nearly half the eurozone countries. And global markets are on edge.

All that forms a tumultuous backdrop as representatives of the G8 countries _ the United States, Germany, France, Britain, Japan, Russia, Italy and Canada _ head to Camp David. Standing in the way of a breakthrough are disagreements over how to bolster Europe’s economy and avoid a broader catastrophe.

In advance of the talks, German Chancellor Angela Merkel struck a conciliatory note this week. She said in a television interview this week that she was open to measures to help stimulate Greece’s economy as long as the country honors its commitments to shrink its debts.

U.S. Treasury Secretary Timothy Geithner applauded the softer tone emerging among European leaders.

“You are seeing them talk about a better balance between growth and austerity, meaning a somewhat more gradual, softer path toward restoring fiscal sustainability,” Geithner said.

The shift shows that European leaders recognize that countries can’t increase their economic growth if they’re forced to focus solely on cutting spending and reducing debts. Geithner said European countries would benefit from investment in public works projects, like roads and schools.

At this weekend’s talks, non-European leaders will seek assurances that European leaders could contain the damage from a banking meltdown in Greece. They worry about a panic that could spill into Portugal, Spain and other indebted European countries _ and to nations outside the continent whose banks are connected to Greek banks.

“If there was a bank run in Greece … would they know how to prevent it from spreading to other countries?” said Jacob Kierkegaard, a research fellow at the Peterson Institute for International Economics.

U.S. officials will be “looking for assurances that the Europeans are aware of what’s needed to keep the euro together and are willing to take those measures.”

The meetings begin Friday evening with an economics-focused summit at Camp David, the presidential retreat in Maryland’s Catoctin mountains. They will end Saturday evening. Most of the officials will join a larger group of international leaders in Chicago for a national-security oriented NATO summit Sunday and Monday.

Investors have been shaken by the power vacuum in debt-stricken Greece. They fear the consequences if Greece refuses to impose deep spending cuts agreed to under a bailout deal. They worry that the bailout could collapse, toppling Greece’s economic and banking system and forcing the nation from the eurozone.

Should that happen, larger governments in Spain or Italy that are struggling to ease their debt loads might soon fail. The eurozone itself could splinter. The result could be a global crisis to rival the one that followed the 2008 collapse of the investment bank Lehman Brothers.

Behind the turmoil is a growing realization that cost-cutting alone won’t solve Europe’s crisis. Europe’s governments have begun to seek ways to energize the continent’s economy. Yet when money is tight and borrowing costs are high, governments have little ability to quickly stimulate growth quick payday loan.

Speaking to business leaders before leaving for the G8 summit, British Prime Minister David Cameron warned Thursday that the eurozone must “make up, or it is looking at a potential breakup.”

“Either Europe has a committed, stable, successful eurozone with an effective firewall, well-capitalized and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the eurozone _ or we are in uncharted territory, which carries huge risks for everybody,” Cameron said in a speech in Manchester.

The Obama administration is also concerned that shocks from Europe could slow the U.S. economy and threaten President Barack Obama’s re-election prospects.

Yet it’s also aware there’s no simple solution. European countries are straining under high borrowing costs. Their lending rates are high because investors are nervous about their debt loads relative to the strength of the economies.

Under pressure from Germany, Europe’s strongest economy, governments have laid off workers, cut pay for others, reduced spending on social programs and imposed higher taxes and fees to boost revenue.

Yet as economies have shrunk, countries’ debt as a percentage of their economies has worsened. Leaders are increasingly recognizing that budget-cutting must be paired with steps to invigorate Europe’s economies.

The United States, along with Japan and Canada, is expected to push Merkel to do more to spur growth in Europe. Germany has begun to accept such an approach after the election of pro-growth Francois Hollande to the French presidency and the fall of a pro-austerity Dutch government.

Among the growth measures some economists recommend are reducing regulations for small businesses, making it easier for workers to find jobs across the eurozone and relaxing barriers that countries have created to protect their industries.

Germany has already negotiated higher public sector wages, a step that could encourage Germans to increase their purchases of goods from more troubled European economies.

“That is the one thing Barack Obama will try to impress on Angela Merkel,” said Sung Won Sohn, an economics professor at California State’s Martin Smith School of Business.

But most stimulative measures take time _ up to a decade, in some cases _ to kick in. They won’t much help a Europe that needs much stronger growth now.

Joaquin Almunia, the European Union’s top antitrust official and its former economic and monetary affairs commissioners, argued Wednesday that the eurozone lacks a growth strategy that can co-exist with short-term steps to shrink government debts.

“We cannot offer to the public an adjustment period of 10 years,” Almunia said.

Claudia Schmucker, an economist at the German Council on Foreign Relations, thinks that while Merkel won’t drop her austerity demands she will eventually agree to some growth measures.

A growth agreement among European leaders would at least “show that we are doing something,” Schmucker said.

In light of all the obstacles, expectations are low for a breakthrough at Camp David this weekend.

“There will be nothing here that tackles the fundamental key questions looming over the global economy,” Kierkegaard said.

Source

Minutes of the central bank’s April 24-25 meeting released Wednesday stated that “several members” thought additional Fed support could be needed if the recovery lost momentum or if the risks to the economy became great enough.

The minutes did not spell out what circumstances would trigger further Fed efforts to lower interest rates to boost the economy. But they did note some threats to the U.S. economy. One is Europe’s debt crisis. Another is the risk that spending cuts and tax increases that could take effect at year’s end if Congress can’t reach a budget agreement could slow growth more than expected.

The comments stood in contrast to the previous minutes, which said that only “a couple” of members expressed support for further bond purchases. Since the financial crisis, the Fed has pursued two rounds of bond purchases to try to push down long-term interest rates, with a goal of encouraging borrowing and spending.

The Fed also announced Wednesday that for the rest of this year and next year all of its meetings will last for two days to allow more time for discussion. Until now, some policy meetings had lasted only one day.

The minutes reflect information the Fed released after its April meeting. In a statement after that meeting, Fed officials repeated their plan to keep a key short-term interest rate at a record low until at least late 2014. The action was approved on a 9-1 vote.

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, opposed retaining the late-2014 target date business cards. He didn’t think economic conditions would warrant keeping the Fed’s benchmark lending rate at a record low for that long. Lacker has dissented at all three Fed meetings this year.

At a news conference after April’s meeting, Chairman Ben Bernanke left open the possibility of further Fed action to stimulate the economy. Private economists generally say another round of Fed bond buying isn’t likely unless the economic outlook darkens considerably.

Bernanke said at his news conference that more bond purchases, or other steps by the Fed, were still an option if the economy weakens. He declared that “those tools remain very much on the table.”

Critics have expressed concerns that the central bank was raising the risk of higher inflation with its long-running campaign to keep rates low. The minutes showed that Lacker thought the Fed would need to begin raising interest rates by mid-2013 to keep inflation under control.

The Fed has kept its federal funds rate, the target for overnight bank lending, near zero since December 2008. That means consumer and business loans tied to that rate have also remained at super-low levels. The lower those loan rates, the more likely it is that consumers and companies will borrow and spend to invigorate the economy.

Source

Tsipras made the comments Sunday after attending a meeting convened by President Karolos Papoulias with the head of the conservative New Democracy and socialist PASOK parties. Papoulias is making a last-ditch effort to broker an agreement and break the deadlock created by the elections, which left no party with enough parliamentary seats to form a government.

If no deal is reached, Greece must hold new elections next month, prolonging the political uncertainty and endangering the country’s euro membership.

Source

But now it’s going on the defensive, and one Missouri academic is coming to its aid.

University of Missouri agricultural economist Ron Plain this week defended the product, known as lean finely textured beef (LFTB) as a safe, low-cost additive to ground beef, saying it has been misrepresented unfairly.

“They used ‘pink slime’ to cause people to think: I don’t want to eat this,” Plain said, referring to extensive ABC coverage of the issue in March. “Do you want something called pink slime in your supper? Of course not.”

(The term is actually attributed to a government microbiologist, who used it in an internal memo in the 1990s.)

This week South Dakota-based Beef Products Inc., the country’s biggest manufacturer of the product, said it would permanently close three plants and lay off 650 people. The closures come after major chains, including Walmart, said they would stop carrying ground beef with the additive, driving down demand for the product.

Dierbergs, Schnuck Markets and Whole Foods are among the companies that also have said they will no longer purchase ground beef containing the additive. Supervalu Inc. said its Shop ‘n Save stores will no longer carry the product, while its Save-A-Lot stores will “review and implement dual-slotting options that will provide customers with choices that comfortably fit their budgets.”

LFTB is regarded by the U.S. Department of Agriculture as safe and has been used by the beef industry for decades. But a firestorm erupted in recent months.

This winter McDonald’s, Burger King and Taco Bell said they would stop using the product after reports in the New York Times questioned its safety. In March, ABC aired nine pieces on “pink slime,” while a petition calling for it to be pulled from the national school lunch program gathered more than 250,000 signatures. The Department of Agriculture responded in late March that school districts participating in the program could request to have LFTB-free ground beef.

“The petition, social media, the school lunch program, the name, the ABC reports: It was a series of things,” said Christopher Waldrop, director of the Food Policy Institute at the Consumer Federation of America.

The product is made of beef trimmings — the same parts of the cow used in ground beef — that are spun in a heated centrifuge to remove fat. What remains is treated with ammonia to kill bacteria. (A similar ammonia treatment is used on many products from chocolate to cheese payday loans.)

“The technology removes beef fat from our diet,” said Plain, who receives funding from the meat industry. “It takes beef trimming and pulls the fat out. If you reduce sales of LFTB, that means more high-fat ground beef on the market.”

The Consumer Federation, often critical of the food industry, has even said it is concerned that the industry could replace the product with another one that is less safe.

“If something else replaces it,” Waldrop said, “we won’t be assured that it will go through the same safety interventions.”

But consumer concerns, critics say, had less to do with food safety than with a growing dissatisfaction over transparency in the food supply. Mostly, critics say, they just want the product to be labeled.

“This is one symptom of the larger industrialized food system,” said Michele Simon, a policy consultant for the Center for Food Safety, an advocacy group often critical of large-scale agriculture. “We can have legitimate conversations about whether this is safe or not, but consumer outcry is about not knowing that these additives are in their food.”

(The Department of Agriculture approved voluntary labeling of the product in March, following the consumer uproar.)

In the coming months, prices of leaner ground beef could rise as the industry runs out of LFTB. “If you can’t get the lean,” said Janet Riley of the American Meat Institute, an industry group, “it’s going to cost more.”

For Missouri’s ranchers that could be good news, especially because the nation’s cattle numbers are low.

“There have been several reports saying that in order to replace (LFTB), it would take close to an additional 1 million head of cattle,” said John Kleiboeker of the Missouri Beef Industry Council. “Our cow herd in the U.S. and Missouri is shrinking. So assuming it’s going to take that number to replace it, this could be a very good thing for our cattlemen.”

In the meantime, the American Meat Institute is trying to more quickly deflect its latest black eye. It held a telephone media conference Thursday to defend transglutaminase. The enzyme — dubbed “meat glue” by critics and chefs — is used to attach pieces of meat together into cohesive-seeming, expensive cuts, often filet mignon.

“We’ve learned we’ve got to get out in front,” Riley said.

Source

The fast-growing company posted earnings Thursday of 2.31 billion dirhams ($629.4 million) for the fiscal year ending March 31. That compares with earnings of 5.95 billion dirhams a year earlier.

It is the 24th year in a row Dubai-based Emirates says it has turned a profit, an unusually long winning streak in the industry.

Although it hails from an oil-rich region, the company is not immune to the high fuel prices plaguing the industry. Emirates said its fuel bill jumped 44 percent over the previous year, wiping out a double-digit rise in sales.

It also grappled with fallout from the Arab Spring unrest, which upended flight schedules to a number of regional destinations.

Revenue increased nearly 18 percent to 67.39 billion dirhams ($18.36 billion).

Sheik Ahmed bin Saeed Al Maktoum, the company’s chairman and chief executive, attributed Emirates’ ability to stay profitable to “sustained and calculated investment” in the business. But he acknowledged that rising costs were taking their toll.

“Managing volatile exchange rates, coupled with our highest ever fuel bill has required immense tenacity. Retaining growth and remaining profitable in these challenging economic times shows our profound understanding of the markets that we do business in,” Sheik Ahmed said in a statement.

Emirates Group, which is owned by Dubai’s government, includes Emirates airline and several smaller businesses, such as the travel service and cargo division Dnata.

The airline posted a profit of 1.5 billion dirhams, down 72 percent.

Dnata acquired a majority stake in online travel agency Travel Republic and half of a South African in-flight catering company last year. The division grew its revenue by nearly 60 percent, and posted its best profit yet of 808 million dirhams.

Emirates is the world’s largest airline in terms of international passenger traffic. It flies to more than 120 destinations in 73 countries.

Source

Republicans said they favor preventing the interest rate increase but blocked the Senate from debating the $6 billion measure because they oppose how Democrats would pay for it: Boosting Social Security and Medicare payroll taxes on high-earning stockholders of some privately owned corporations.

GOP senators want a vote on their own version heading off the interest rate increases and paid for by eliminating a preventive health fund created by President Barack Obama’s 2010 health care overhaul. That financing idea has no chance of passing the Democratic-run Senate and has drawn a veto threat from the White House.

Tuesday’s vote was 52-45 in favor of starting debate on the Democratic legislation _ eight votes shy of the 60 needed. Senate Majority Leader Harry Reid, D-Nev., was the only one to defect his party’s position, a procedural move that will allow him to hold the vote again should the two sides work out a deal later.

The vote was largely symbolic because the Democratic bill had no chance of approval by the GOP-led House.

The measure would extend today’s 3.4 percent interest rate on subsidized Stafford loans for another year. Those rates would grow to 6.8 percent without congressional action, thanks to a 2007 law that gradually lowered those rates but expires on July 1.

Both parties know full well that they will need a bipartisan pact on financing the measure. They are both motivated to strike such an agreement because in the months before this November’s presidential and congressional elections, neither wants to be blamed for letting college costs grow for students and their families struggling in today’s weak economy.

But before they strike a compromise _ which both parties believe will happen before July 1 _ both were eager to use the debate to score partisan points.

Senate Minority Leader Mitch McConnell, R-Ky., said Democrats were forcing that vote as “a way to drive a wedge between Republicans and a constituency that they’re looking to court ahead of November’s elections. That’s what today’s vote is all about for them.”

McConnell said the Senate “has ceased to be a place where problems are resolved guaranteed payday loans. It’s become, instead, a place where Democrats produce campaign material.”

Reid said he might be willing to allow a vote on the GOP bill. But he also criticized Republicans for opposing the Democratic plan.

“They’re sending a clear message that they’d rather protect wealthy tax dodgers, and that’s what they are, than help promising students achieve their dreams of higher education,” Reid said.

Both leaders acknowledged that a bipartisan agreement on how to finance the legislation was needed for the effort to advance, but each dared the other to propose such a plan.

“If they want some other way to pay for it, let’s take a look at that,” Reid said.

McConnell said Democrats should support the GOP proposal “or at the very least offer a bipartisan solution of their own.”

The fight over student loans has become a high-profile, symbolic tussle over which party wants to do more for Americans scrounging to get by at a time jobs are hard to find, and each side is happy to force the other to take embarrassing votes.

With both parties focused on this November’s presidential and congressional elections, it is no coincidence they each have chosen to pay for their bill with a favorite target that they believe speaks to their core voters: Democrats going after higher revenues from the rich, Republicans trying to punch a hole in Obama’s health care overhaul.

Subsidized Stafford loans are for low- and middle-income students. The higher rates, should they occur, would only affect students taking out new loans starting July 1.

Democrats who controlled Congress in 2007 and wrote the student loan law allowed the lower interest rates to rise again this summer because they felt it would have been too expensive to permanently reduce those rates.

The Education Department estimates 7.4 million students will borrow $31.6 billion in such loans in the year beginning July 1, averaging $4,226 for each student.

These loans generally are paid off over a decade or more after graduation. Allowing interest rates to double would cost the typical student about $1,000 over the life of the loan, the administration says.

Source

Although Smith is well-known in the world of St. Louis lawyers, developers and politicians, the managing partner at Husch Blackwell isn’t a household name. And that, according to Smith and those who have worked with him, is the way he likes it.

“He never is one to seek the limelight, and those are the folks who often are the most effective,” said former St. Louis Mayor Freeman Bosley Jr., a law school classmate who consulted Smith throughout his political career. “He never wanted to be out front.”

That changed last week, after the CVC sought a judge’s ruling on whether a state open-records law requires the commission to publicly release some documents related to the proposed renovation of the Edward Jones Dome. The CVC and the Rams, as required by the team’s lease for the Dome, have traded proposals on how to make the building a “first-tier” stadium by 2015.

The CVC filed a suit against the Post-Dispatch, which has sought the records. The news organization later filed its own countersuit and argued that the public shouldn’t be kept in the dark about a multimillion dollar project involving a public building and public money.

After filing its suit on Wednesday, the CVC launched a public relations offensive. On television and radio and in newspapers, Smith defended the commission’s position that it has a legal right to keep documents secret. He argued that if the public knew too much and too early, negotiations could suffer; he also said the CVC feared breaking a confidentiality clause in the lease.

The public statements were an unusual move for Smith, 57, of Ladue. Like Richard Callow, the politically connected publicist who helped organize Smith’s media interviews last week, the lawyer usually stays behind the scenes.

But Smith’s fingerprints have been on big, publicly subsidized development deals across the region for more than two decades.

He represented MasterCard when it opened a divisional headquarters in O’Fallon, Mo., and Express Scripts when it built a new headquarters at the University of Missouri-St. Louis. When Peabody Energy negotiated an incentive package to stay downtown, Smith was in the room for the coal giant. And when developer Bill Koman needed someone to help him navigate the highly regulated waters of a casino proposal, he hired Smith.

Business groups such as the St. Louis Regional Chamber and Growth Association have enlisted Smith as an expert to explain tax increment financing to a state Senate hearing or a newspaper editorial board. That makes sense since he has helped draft many of the region’s biggest TIF packages.

On the public side of the fence, Smith was City Hall’s lawyer in its effort to get a major convention hotel downtown, and he represented St. Louis County in its 2005 derby to find a developer for a 550-acre industrial park near Lambert-St. Louis International Airport.

And then there are Smith’s sports deals. He was involved in the development of what would become known as the Scottrade Center, and he was one of Mayor Francis Slay’s negotiators in talks with the Cardinals to build the current Busch Stadium.

Earlier, in the mid-1990s, Smith was the CVC’s point man in negotiations with the then-Los Angeles Rams, who had not yet committed to moving to St. Louis. The dilemma facing the CVC now — a requirement that the Dome be “first tier,” or better than three-quarters of all National Football League venues — was born in those meetings.

“It’s in my lease,” Smith told the Post-Dispatch in a 1996 story about the “first-tier” escape clause.

He said at the time that the provision “wasn’t any big secret,” and that it was inserted in the lease at the Rams’ insistence during a marathon weekend negotiating session.

Public officials weren’t disturbed by the clause, he told the newspaper, because they were asking the Rams to commit to the Dome for 30 years, an unusually long period in pro sports leases easy payday loans.

Critics, however, have since scorned the provision for giving the team a chance to break the lease early, while setting a standard that would be difficult, and expensive, to satisfy.

Smith won’t talk about those negotiations now. During two phone interviews on Friday, Smith said he didn’t want to jeopardize the current process by talking about negotiations with the Rams in the 1990s, or the CVC’s strategy for moving forward.

“I’m guessing I’m one of the last men standing,” Smith said of his current work on the Dome issue. “There aren’t a lot of lawyers left practicing who were involved in those (original) negotiations.”

credibility and trust

Smith grew up in Dogtown. After graduating from Bishop DuBourg High School in south St. Louis, he attended St. Louis Community College at Forest Park for two years before graduating from Washington University and then St. Louis University School of Law.

“He didn’t come up with a silver spoon or anything,” said Bob Denlow, another law school classmate. “He just worked his way up.”

Smith’s first job out of law school was at the Land Clearance for Redevelopment Authority, the city-run agency that assembles land for real estate projects.

There, Smith worked under Charles Farris, a longtime city development official who was known by some as “Mr. Urban Renewal.” Among the many big civic development projects Farris spearheaded was the second Busch Stadium.

“I got immersed with some people who were pretty experienced on these sorts of projects, and it was invaluable,” Smith said. “It was experience you couldn’t buy.”

After about two years, Smith left City Hall to take a job at the firm he now leads.

Denlow, who represents landowners in eminent domain cases, wound up across the table from Smith several times and remembers him as smart and hardworking. Smith was smart enough to get out of the courtroom and into a less visible — but maybe more influential — side of real estate law, Denlow noted.

“He’s a deal-maker now,” he said.

Bosley said that, after he was elected mayor in 1993, there was no shortage of people giving him advice. But the new mayor made Smith, his former law school classmate, a leader of his transition team and later put him on a volunteer kitchen cabinet that met every Monday for four years.

“I’ve got plenty of friends,” Bosley said, “but Greg is smart.”

During that time, St. Louis already had lost two efforts to secure an NFL expansion team. A stadium was under construction, but there wasn’t any team to play in it.

Soon after the first meeting between St. Louis leaders and the Rams organization, Bosley and his counterpart in St. Louis County, the late George R. “Buzz” Westfall, tapped Smith to create FANS Inc., a nonprofit group that would lead the region’s efforts.

“He’s not afraid to get in your face,” Bosley said. “In negotiations, you can’t always be nice, and Greg knows that. You’ve got to get things done.”

Others praise Smith’s ability to work well in both the no-nonsense world of business and the world of politics, where public sensitivities matter and ballot-box considerations are never far from clients’ minds.

“It’s true there’s a certain sensitivity to public sentiment and political reality that have to bear on projects of this magnitude,” Smith said, speaking of the Dome and his past work.

But he doesn’t think that’s what makes him the go-to lawyer on so many big projects.

“The biggest advantage I’ve had over the course of the last 20 years,” Smith said, is that “I developed some credibility and trust with a wide variety of public officials as someone who can get a deal done.”

Tim Logan of the Post-Dispatch contributed to this story.

Source

Disappointing April sales results from big retailers set the bleak tone early on. Costco, Macy’s and Target, among others, reported sales that were weaker than analysts had predicted. Colder weather and renewed concerns about the economy weighed on shoppers.

GM shares fell 2.4 percent after the automaker said its first-quarter profit declined, mainly because of weakness in Europe.

Fears of a global financial freeze-up caused by the European debt crisis have receded, but many now worry that Europe’s recession will hurt sales by American exporters such as GM and Caterpillar. Caterpillar lost 1.9 percent.

European stocks closed mostly lower, giving up earlier gains, after signs that European Central Bank will not inject more cash into the region’s fragile banking system.

Trading of U.S. stocks was uneven because investors were “balancing between a weak close for European stocks and trying to bet on what (the monthly jobs report) will look like,” said Peter Tchir, who runs the hedge fund TF Market Advisors.

The labor market has been on traders’ minds all week because the government’s monthly jobs report is due out Friday. The final major indicator before that announcement was positive: The number of people applying for unemployment benefits fell last week by the most in three months.

The conflicting economic indicators offered little direction for major U.S. stock indexes. They opened down, rose slightly in the first 15 minutes of trading then turned lower. Eight of the 10 industry groups in the Standard & Poor’s 500 index fell. Two rose, but barely.

The Dow Jones industrial average fell 61.98 points, or 0.5 percent, to 13,206.59. The S&P 500 dropped 10.74, or 0.8 percent, to 1,391.57. The Nasdaq composite average slid 35.55, or 1.2 percent, to 3,024.30

The Carlyle Group, a big, politically-connected private equity firm, edged higher after an initial public offering that raised $671 million. The company had priced its stock below the expected range late Wednesday. Carlyle, trading on the Nasdaq under the ticker “CG,” has about $147 billion in assets under management.

Other swinging stocks:

_ Green Mountain Coffee Roasters Inc. plunged 47.8 percent. The maker of single-cup coffee machines and cartridges said late Wednesday that its earnings for the fiscal year ending in September will be far below its previous forecast and analysts’ estimates. Green Mountain shares have lost more than three-fourths of their value since September.

_ Cablevision Systems Corp. dropped 7.9 percent after its first-quarter revenue fell short of analysts’ expectations and profit declined sharply.

_ Viacom Inc., owner of MTV and Paramount Pictures, rose 3.4 percent after saying its net income rose sharply as its TV networks brought in more revenue.

_ Orbitz Worldwide Inc. rose 4.4 percent after narrowing its first-quarter loss and beating analysts’ estimates.

Source

Green Mountain () shares sank nearly 40% in early morning trading Thursday, dipping to about $30 after closing Wednesday at $49.52.

The company’s quarterly earnings came in line with expectations at 64 cents a share, though its $885 million in sales missed estimates of $972 million.

Green Mountain also reduced its fiscal 2012 sales guidance from between $4.3 and $4.5 billion to between $3.8 and $4 billion. The full-year earnings-per-share projection was cut from between $2.55 and $2.65 to between $2.40 and $2.50.

17 of the nation’s best small coffee makers

In a conference call with analysts, Green Mountain executives said they didn’t have a full explanation for why sales were weaker than expected. They suggested that low brewer machine sales and weak demand for holiday drinks during the warm winter — like cider and hot cocoa — were partially to blame.

"We’re very positive about this business going forward, but there’s a lot of moving parts," Green Mountain CEO Larry Blanford said credit reports free.

Green Mountain currently dominates the single-serving coffee market with its popular Keurig, or K-Cup, machines.

It was one of the fastest-growing companies of the past decade and one of the best-performing stocks, handing investors 110% gains on an annualized basis until last fall.

Things changed in October, when hedge fund manager David Einhorn of Greenlight Capital outlined a case for why Green Mountain would see its market share crumble, citing its expiring patents. He also raised concerns about the firm’s accounting.

More recently, Green Mountain’s stock took a hit after Starbucks (, Fortune 500) unveiled its own single-cup home-brewing machine. Shares gained some of this ground back after the two companies announced they were joining forces to sell Starbucks-branded single-serving coffee packs for Green Mountain’s newest coffee machine, the Vue.

Green Mountain and Starbucks first paired up to sell Starbucks’ coffee in Green Mountain K-Cup machines in March 2011.  

Source