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Friday, August 18, 2006

Altria: Jubilation On Tobacco Row

Big tobacco won another round in the courts recently. It was papered as a minor setback, but the victory was clear.

A federal judge said that the tobacco companies had conspired to hide the dangers of smoking. Given how many people have died from tobacco use over the past several decades, one would think that was serious business. But, not in the halls of the American legal system. Most important for the tobacco companies, the same court said that the firms could not be forced to fund multi-billion smoking campaigns. The savings will be enormous.

According to Reuters, the judge has some very negative things to say about what big tobacco had done: "the companies suppressed research, destroyed documents and manipulated nicotine levels to perpetuate addiction, but an appeals court ruling prevented her from slapping the companies with costly remedies".

So, the shares in Altria can continue their rise, and the company can spin out its Kraft unit without worrying that shareholder suits will sink the parent.

With its stock at $83, up from $30 in 2003 and $18 in 2000, big MO can roll on. Is the next stop $100?

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