Papal Stocks Crash

VATICAN (WNI) - Papal Holdings Inc. (NYSE:F - news) on Friday slashed its earnings forecast for 2005 and cautioned that it no longer expects to hit its 2006 profit goal. The international company, which has major manufacturing holdings in red and purple fabrics, incense, gold processing, wineries, bakeries, relics, tourism, dispensations, convents, forgiveness, grace and real estate cited the recent death of CEO, John Paul II for the losses.

“‘Papa’ as we liked to call him, was crucial to our operations,” said spokesman Giuseppe Palomola from the Vatican. “Our board had asked name a successor but his health deteriorated so quickly he didn’t have time. We ask our shareholders for forgiveness,” he added.

The profit warning, which was declared after the market closed, lead to Standard & Poor's cutting its debt rating outlook on the stock and its finance arm, Heaven’s Gate Financials, to "negative." This brought the stock a step closer to junk status. A downgrade to junk could raise borrowing costs significantly.



“At present the Papaists rely heavily on American stockholders for capital. Without solid management in place they will be reluctant to buy. You may see some people unloading their stock for more attractive opportunities.” said investment banker Randolf Isaacs of Bear Sterns in New York. “Ordinarily Episcopalians see a bump in there share price when something negative hits the Vatican,” he added.

"The industry dynamics that Papal Holdings and other theological manufacturers face are comparable- high material costs, high legacy costs, declining market share, lackluster product cycle success, competitive recruiting" said Buddy Kozar, philosophy analyst for HSBC Securities.

Most observers believe the Board of Directors, known as the College of Cardinals, will act quickly to find a replacement. Many names have been rumored including Jack Welch, former CEO of GE, but those close to the organization believe they will promote from within.

“This is an organization that likes to bring its executives up through the ranks,” said Monsignor Geraldo Puglia, a stockholder since birth. “They believe in the corporate culture, you just can’t pick that up coming on board late in life.”

“I think they are going to bounce back bigger and better then ever!” enthused broker Todd MacCarthy of Merrill Lynch. “Despite what others are saying, I’m encouraging my clients to buy. This is just temporary.” he concluded