This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Google's KitKat Deal Lessons for Investors

Stocks in this article: GOOGHSYNSRGYMUMSFT

NEW YORK ( TheStreet) -- When Google (GOOG) announced this week that it would re-name the next version of its Android software KitKat, after a candy bar, many American outlets got the story wrong.

TheStreet wasn't among them because we went with the press release.

I suspected such a thing would happen because I spent the weekend in York, England, at the Chocolate Museum. The KitKat bar was invented in York, by a candy maker called Rowntree's that wanted something miners could take down for lunch during the Depression.

Rowntree licensed the KitKat name for the U.S. to Hershey (HSY) in the 1970s, but when the company was sold, in 1988, they sold to its rival Nestle (NSRGY), although calling Hershey's and Nestle rivals is a bit like comparing York's own League Two Minstermen to Manchester United. The game's the same, it's just played on a different scale.

Nestle maintained the Hershey agreement, keeping the rights in the rest of the world. Hershey's will produce Android-themed candy in the United States and Nestle will do it everywhere else.

You should also know that a Nestle KitKat can be quite different from a Hershey KitKat. Nestle once licensed KitKat to a company called Fujiya, which produced it in dozens of flavors from red bean to wasabi. Nestle bought out Fujiya's KitKat share in 2000, but maintained the strange flavors, and uses flavors like orange in Europe.

Nestle itself is a Microsoft (MSFT) among food companies, in that it's enormous and into everything. It has a market cap of $207 billion and 339,000 employees, making everything from Purina dog food to HotPockets hand-held snacks to Gerber baby food.

Nestle stock trades like Microsoft, too, heavily but in a fairly narrow range. It had revenue of $101 billion last year, bringing $11.6 billion of that to the net income line, $3.62 per share, so its trailing price-to-earnings multiple is 17.88, well ahead of the software company.

Hershey's is more comparable to Micron (MU), the memory chip company, because it focuses on one key area, in this case sweets. Its market cap is $20.3 billion, it has 12,100 employees, and it got out of its biggest diversification, the Friendly chain of ice cream parlors, a quarter-century ago.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,677.90 +216.58 1.32%
S&P 500 1,950.82 +23.71 1.23%
NASDAQ 4,452.7920 +69.9450 1.60%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs