* Estimates 4th-qtr adjusted earnings/shr $1.26-$1.30
* Estimates sales to rise by about 19.8 pct
* Raises share repurchase program to $1.5 bln from $1 bln
* Ackman raises questions about Herbalife distributors
Feb 3 Herbalife Ltd estimated
fourth-quarter profit and sales above market forecasts on
Monday, but investor William Ackman quickly struck back with
claims about a former top Herbalife distributor, raising new
questions about the company's sales practices.
Herbalife shares rose as much as 6 percent in early trading
on Monday after the company also said it had increased its share
repurchase program by $500 million to $1.5 billion, but the
shares reversed gains to trade lower after Ackman released his
claims on a new website.
Hours after the company's release on its expected results
for the 2013 fourth quarter, Ackman charged on a new website
that Herbalife, which he accuses of being a pyramid scheme,
found new distributors through a business that had been
convicted in Canada 10 years ago of running an illegal pyramid
Ackman spotlighted Shawn Dahl, who had been a top Herbalife
distributors for years, saying that Dahl attracted distributors
with false promises of making money quickly.
Herbalife did not immediately respond to a request for
comment about Ackman's new website. Dahl did not immediately
return messages left through his new business venture for
Ackman has long said that he is sticking by his $1 billion
bet against the company, arguing that Herbalife's share price
will eventually fall to zero once regulators investigate his
allegations that Herbalife is a pyramid scheme.
Herbalife, which sells weight-loss products, has vehemently
denied that it is operating a pyramid scheme - an unsustainable
business that typically makes most of its money by recruiting
distributors rather than selling products to real customers.
The company's shares have fallen 20 percent this year but
are still up 80 percent for the last 12 months. Herbalife
shares on Monday were down 2.5 percent at $62.74 in afternoon
Ackman's paper losses on Herbalife, which had at one point
reached $500 million, have shrunk this year to be closer to $300
million, a person familiar with the performance of Ackman's
hedge fund, Pershing Square Capital Management, said.
Big-name investors who have lined up against Ackman,
including Carl Icahn and George Soros, have done better. Icahn
is up about $500 million since he first reported a stake in
Herbalife in February 2013, according to Reuters calculations.
Icahn controlled about 16.8 percent of Herbalife as of Sept.
30, making him the company's biggest shareholder.
Ackman is relying on regulators to help his crusade against
Herbalife. He got a boost last month when U.S. Senator Edward
Markey called on the Securities and Exchange Commission and the
Federal Trade Commision to investigate the company.
STRONG FOURTH QUARTER
Herbalife, which sells products through a network of
independent distributors, said on Monday it earned between $1.26
and $1.30 per share, before items, in the fourth quarter ended
Analysts on average had expected a profit of $1.17 per
share, according to Thomson Reuters I/B/E/S.
"Ultimately it's strong recruiting momentum around the world
... (that) is really driving the core results," said Wedbush
Securities analyst Rommel Dionisio, adding that the results
showed the strength of Herbalife's business model.
The company said fourth-quarter sales rose about 19.8
percent, which works out to about $1.27 billion. Analysts on
average had expected sales of $1.22 billion.
Herbalife forecast profit for the current first quarter of
$1.24-$1.28 per share, saying that the weak Venezuelan bolivar
has hurt earnings. Analysts were expecting a profit of $1.40 per
The company reaffirmed its 2014 adjusted earnings forecast.
It also said it planned to raise about $1 billion through an
issue of convertible senior notes due 2019 to fund the share
buyback. The initial purchasers of the notes will be Bank of
America Merrill Lynch, Credit Suisse, HSBC and Morgan Stanley.