E-motions: Vol. No. 1, Issue No. 26 Brought to you by California News Tech (OTC BB: CNTE)

By: Tai Nicolopoulos E-Motions Writer 05/10/2006

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1. Emotions in Focus: For Big Brands, Credibility Worth a Little Lost Revenue

    With a ban on full calorie sodas about to come into effect in most public schools, not only have health and the fight against obesity in America been on the public mind, but also people are wondering how former President Clinton and the Clinton Foundation got Coca Cola, Pepsi and Cadbury-Schweppes to seemingly go down without a fight. Some have made the point that soda sales in schools only make up about one percent of these companies’ total revenues. Still, why would they want to turn away the opportunity to make children into lifelong customers for their products? The answer has more to do with public image than it has to do with revenues.

    For these major soda producers pressure from the Clinton Foundation was hardly the start of their problems with public health concerns. Already under attack for the sugar content of their sodas and their marketing to children, Coca Cola, Pepsi and Cadbury-Schweppes feared negative attention from the Food and Drug Administration and Big Tobacco-like lawsuits from public interest groups. Company leaders ultimately preferred to be linked in the minds of parents and other consumers with health and a slimmed-down former President Clinton, rather than be compared to tobacco companies.

    Furthermore, these companies have already been trying to cash in on the trend towards healthier living in America, creating new, higher-price sports and energy drinks, and fitness waters, none of which were banned in the recent school agreement. Major beverage companies know that these drinks, many of which still contain large quantities of sugar, are popular even with people who are not athletic. It seems like these days, everyone wants to associate themselves with being healthy, from teenagers to multinational corporations.

2. The Big Movers and Why

    Are you missing out on potential profits from Heads UpTM recommendations? Last week, MediaSentimentTM subscribers using Heads UpTM for Thumbs Up / Thumbs Down recommendations for publicly traded companies were able to take advantage of these Big Movers, moving 12% or more in their recommended directions, after they released earnings.

Big Movers in the Spot light:

    On Wednesday, May 3rd, Whole Foods Market, Inc. (Nasdaq: WFMI), which engages in the ownership and operation of natural and organic foods supermarkets, went up 13.61% after a Thumbs Up recommendation from Heads Up™. Meanwhile, Imperial Sugar Co. (Nasdaq: IPSU), which engages in processing and marketing refined sugar in the United States, went down 17.06% the next day after a Thumbs Down recommendation from Heads Up™. For Whole Foods, the push against sugary sodas in schools is just one social trend out of many that have made this health food supermarket chain so successful. With the importance of nutrition and America’s rising rates of obesity so prominently in the news, people with money are starting to change their shopping habits, or are at least willing to pay a lot more for the promise of good health. Like recent profitable quarters, Whole Food’s customers shunned low price processed junk food and instead were willing to pay more to shop at a store with a reputation for better quality and healthier food. In the case of Imperial Sugar, Clinton’s school soda ban only served to highlight the possibility that sugar’s dominance as an omnipresent American commodity may be changing. Sugar is definitely not going away in the long term and Americans still consume staggering quantities of sweetened foods. Nonetheless, in the short term, the connection made recently in the public mind between sugar and childhood obesity created negative sentiment in the media and created problems this quarter for the sugar industry and a number of related processed food manufacturers.

Other Big Movers:

Monday, May 1, 2006

iParty, Corp. (NYSE: IPT), which operates as a retailer of party goods and party planning services in the United States, went down 15.56% after a Thumbs Down recommendation.

Tuesday, May 2, 2006

Natus Medical, Inc. (Nasdaq: BABY), which engages in the development, manufacture, and marketing of products for the detection, treatment, monitoring, and tracking of common disorders in babies in the United States, went down 20.98% after a Thumbs Down recommendation.

Metalico, Inc. (NYSE: MEA), which through its subsidiaries, engages in the recycling of metals, as well as in the fabrication of lead products primarily in the United States, went up 33.48% after a Thumbs Up recommendation.

Symbol Technologies, Inc. (NYSE: SBL), which engages in the design, development, manufacture, and servicing products and systems used in enterprise mobility solutions, went up 16.82% after a Thumbs Up recommendation. products.

NPS Pharmaceuticals, Inc. (Nasdaq: NPSP), engages in the discovery, development, and commercialization of small molecules and recombinant proteins. The company, whose product candidates are primarily used for the treatment of bone and mineral disorders, went down 39.46% after a Thumbs Down recommendation.

Cavalier Homes, Inc. (NYSE: CAV), which together with its subsidiaries, engages in the production, sale, financing, and insuring of manufactured homes, went down 14.29% after a Thumbs Down recommendation.

Wednesday, May 3, 2006

Cognizant Technology Solutions, Corp. (Nasdaq: CTSH), which provides custom information technology (IT) consulting and technology services, went up 14.10% after a Thumbs Up recommendation.

Electronic Arts, Inc. (Nasdaq: ERTS), which engages in the development, publishing, and distribution of interactive software games that are playable by consumers on in-home video game players, personal computers, mobile video game players, and the Internet, worldwide, went down 13.50% after a Thumbs Down recommendation.

Thursday, May 4, 2006

Radiologix, Inc. (NYSE: RGX), which provides diagnostic imaging services in the United States, went up 21.89% after a Thumbs Up recommendation.

BSQUARE, Corp. (Nasdaq: BSQR), which provides software and engineering services to smart device market places, went down 17.48% after a Thumbs Down recommendation.

Critical Therapeutics, Inc. (Nasdaq: CRTX), a biopharmaceutical company, which engages in the discovery, development, and commercialization of products to treat respiratory, inflammatory, and critical care diseases, went down 16.87% after a Thumbs Down recommendation.

    All figures reflect all MediaSentiment Heads UpTM recommendations between Monday, March 27, 2006 and Friday, March 31, 2006, rating companies on the day of their quarterly earnings releases correlated with their stock highs and lows for the subsequent day.

3. How to Use the News

    As the bad press for high sugar and high calorie foods continues, remember that the companies in a position to take advantage of the changing social climate may not necessarily be the ones with the genuinely healthiest foods. Not only do consumers respond well to public relations campaigns making obesity culprits appear more health-friendly on the surface, but also Americans snack just as much and are as hurried as ever.

    McDonalds successfully weathered social criticism after negative reports from nutrition experts and exposes like the movie Super Size Me by offering supposedly “healthier” salad and grilled sandwich options. New McDonalds ads play into the health trend by offering free yoga DVDs with salad purchases. While adding a whole packet of McDonald’s dressing to a salad may actually make it worse than indulging in a burger, at least the company is back in public favor. Even if a company does not make the healthiest food, as long as the public perceives it as supporting good health, it has a chance of staying popular and profitable.

    Conversely, when companies do genuinely produce healthy food, sometimes it is still not enough. Food options need to be appealing and to fit into American’s hectic lifestyles. Part of the genius behind companies like Whole Foods is that they offer pre-made healthy meals and deli items. Now consumers who would never take the time to cook a nutritious meal for their families can bring home healthy food options. Other companies offering healthy pre-made foods, such as Stouffers’s Lean Cuisine, or even the makers of popular energy and meal replacement bars, such as Cliff Bar and Power Bar fit into this model. Generally speaking, when looking to invest in the health food movement, look for good public image and convenience over substance, but remember, health culture also revolves greatly around diet trends, and may be impossible to guess what foods experts decide are the next enemies in the war on fat.

4. Links you can use

How Bill Put the Fizz in the Fight Against Fat
Bill Clinton Helps End Soda Sales in Schools

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