Navigate this market better. Subscribe for FREE stock alerts and information.

Monday, November 17, 2014

Hearing aid maker Sonova posts lower profits after bold Costco deal, (NASDAQ: COST)

The world's largest maker of hearing aids Sonova posted disappointing first-half profits and a share buyback half the size of what was expected, worrying investors about its strategy of boosting market share by making deep discounts.The Staefa, Switzerland-based company's recent deal to sell high-end hearing aids at rock bottom prices via U.S. warehouse club Costco Wholesale Corp stepped up a price war in the fiercely competitive $15 billion market for hearing healthcare.It also alienated independent shops that were Sonova's traditional outlets and angered its competitors: Danish rival William Demant slashed its full-year targets last week, blaming Sonova's deal with Costco - which accounts for 10 percent of all devices sold in the U.S. private market according to estimates by Bernstein Research.Now the Swiss company looks as though it may also have damaged itself by the Costco deal: Not only is it having to woo back the independent shops that turned their back on its brands following the U.S. partnership, but analysts believe it will now be hard for Sonova to meet its full-year sales targets.

Costco Wholesale Corporation (Costco) with its subsidiaries is engaged in the operation of membership warehouses in the United States and Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Australia, and through majority owned subsidiaries in Taiwan and Korea. Shares of COST remained unchanged at $138.48. In the past year, the shares have traded as low as $109.50 and as high as $138.93. On average, 2001760 shares of COST exchange hands on a given day and today's volume is recorded at 0.