Jones Soda posts third straight quarterly loss

Jones Soda posted a $3.85 million loss in the first quarter, its third straight quarterly loss as the niche player moves into the mainstream soda market.

The Seattle company will "report modest losses for the next few quarters," Chief Executive Stephen Jones said in a conference call with analysts after earnings came out Thursday.

"We're focused on building a highly profitable business over the next few years," he said, and that "requires an investment in infrastructure."

That didn't reassure investors, who sent shares down 10 percent, or 35 cents, to $3.10 in after-hours trading. The stock had climbed 21 cents during regular trading before the earnings news.

Jones Soda continues to add employees, work on new products and update computer systems to handle the growth that came with wider distribution of its canned sodas. It is also spending money on branding that "creates love and buzz for Jones" in addition to generating sales, Stephen Jones said.

One of the company's recent products, 24C, a flavored multivitamin drink, is "a hit," he said. The company also has finished rolling out its first cola, a new flavor needed to fulfill a deal Jones signed last year to be the exclusive soft-drink provider at Qwest Field.

Jones Soda continues to work on a new drink with Pharma Gaba, a form of a natural amino acid popular in Japan, he said.

The seeds of Jones' profitability problems appear to have been planted in late 2006, when the company started selling canned sodas to the nation's largest retailers, including Wal-Mart, Kmart, Safeway and Kroger. Until then, it had sold cans only through an exclusive agreement with Target.

The expansion helped to more than triple Jones' fourth-quarter 2006 earnings to $2.1 million. But delays in getting cans onto retailers' shelves led to a devastating 98 percent profit drop in the second quarter of 2007. Jones shares fell 26 percent to $11.35 the day after the drop was announced.

The company began hiring people to make sure cans arrived on store shelves at the right times, but its earnings and stock continue to suffer. It posted a $10.2 million loss in the fourth quarter of 2007 and now trades below $5 a share.

In the just-completed first quarter, Jones' net loss was 15 cents a share. Its net revenue was $9.4 million.

Jones founder Peter van Stolk stepped down as chairman and chief executive Dec. 31 but remains on the board. Three other directors are not standing for re-election at the annual meeting June 5.

One analyst told executives on the conference call Thursday he was concerned about the departure of Scott Bedbury, a branding expert who became interim chairman after van Stolk vacated that role.

"There's no question Scott had a special place in the heart and mind of Jones Soda, but there are an awful lot of people at Jones Soda who have that spirit and have that creativity," Stephen Jones said.

He also said the company is excited about the three new nominees to the board: Jonathan Ricci, Jones' chief operating officer since January; Matthew Kellogg, a previous director and real-estate developer who co-owns Tutta Bella Neapolitan Pizzeria and is managing member of Canal Investments; and Susan Schreter, CEO and chairwoman of the strategic-planning firm First Transaction Management and the founder of TakeCommand Information Media.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com