How C3 -- Oops, Charles & Colvard -- Once Again Buried the 'News' in a Press Release - TheStreet

How C3 -- Oops, Charles & Colvard -- Once Again Buried the 'News' in a Press Release

Also, <I>Toy Story</I> maker Pixar plans a remedy for its stock's cyclicality.
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Maybe the best way to do research on

Charles & Colvard

(CTHR) - Get Report

, formerly called

C3

, would be to hire a gravedigger. That way it would be easier to find all of the news that it buries in its press releases.

No stranger to this column, this is the company that makes imitation diamonds called moissanite, which are honed from silicon carbide crystals that it buys from

Cree Research

(CREE) - Get Report

. Cree is run by the brother of C3's CEO, Jeff Hunter. Cree has a guarantee that requires C3 to buy all of Cree's silicon carbide crystal production through next June.

It was just a month ago that C3 was chided

here for burying the news that third-quarter shipments of moissanite, its main product, were below expectations. While they were weak, however, the company assured investors that "based upon feedback from domestic retailers and international distributors, the company is confident it will meet its sales goals for the second half of 1999."

Which brings us to Wednesday and a late-in-the-day press release headlined, "C3 Inc. Launches Strategic Global Marketing Program; Company Hires New Talent to Advance Strategy." If you didn't know any better, you'd think it's just another boring press release about some marketing program. And that's just what it is -- until deep in the press release, in a sentence that starts with the word "however" and ends with the words, "given the current forecast the company does not expect to meet previously announced estimates for the second half of the year." The release also said the company had shipped about 10,000 carats of moissanite in the third quarter.

Huh? What happened to the July forecast that the old C3 would meet its sales goals of at least 60,000 carats for the second half of the year? Or last month's assertion that it would still meet second-half sales goals

despite

the third-quarter slowdown? The company had blamed third-quarter problems on a summer jewelry slump that it hadn't expected because it's new to the jewelry biz. Never mind that the old C3 has been selling these gems for 16 months, and never mind that Hunter told me a month ago that a new national advertising campaign -- just in time for Christmas -- should spark year-end demand.

What changed? According to Hunter, a recent trip to countries outside the U.S., which account for between two-thirds and one-half of all of its sales, convinced the company that international retailers didn't have the marketing material and appropriate branding to sell the required volume to meet projections. (Excuses, excuses!)

The result: A new branding program and a new name, Charles & Colvard -- a name that "reflects the heritage of the company."

Heritage? What heritage? This company is only 4 years old. Who is Charles, and who is Colvard? Family names, Hunter says. They're two of the three Cs in C3 -- the third is Cree.

Speaking of Cree, what about C&C's "deal" with Cree to buy everything Cree makes through June? If C&C's shipments are down, but it has to continue taking product from Cree, won't C&C's inventory be up? Yep, says Hunter. "But this isn't like lettuce, something you have to use. We're thinking for the long term."

Great, but if the company takes

too

long to get its act together, it risks running out of excuses.

Pixar Revisited

An item yesterday

mentioned how

Pixar

(PIXR)

has become a story stock that rises and falls before and after the release of each of its movies. Watch for the company, miffed at the stock's image, soon to announce a strategy to counter the company's cyclicality. Also watch for it to get aggressive with the way it communicates with Wall Street; an investors' day is planned for analysts by year-end at the company's California headquarters.

Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

herb@thestreet.com. Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.