1.Monsanto shares slide on weak earnings
2.Clash over GM Seeds Brings Private Eyes, Angst - and Lawsuits
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1.Monsanto shares slide on weak earnings
http://money.cnn.com/2005/06/29/news/fortune500/monsanto.reut/
Stock loses 6.5 percent by mid-day; executives try to reassure shareholders about outlook.
June 29, 2005

KANSAS CITY, Mo. (Reuters) - Monsanto Co. said on Wednesday third-quarter net income fell 81 percent due to write-offs for two large acquisitions and predicted next quarter's results would fall short of Wall Street's forecast, sending the agricultural technology company's shares down 6.5 percent by mid-day.

St. Louis-based Monsanto (down $4.02 to $63.82, Research) said net earnings for the period ending in May fell to $47 million, or 17 cents a share, compared with $252 million, or 93 cents per share, a year earlier.

The company said it expected a loss of 55 cents per share in the fourth quarter due to seasonal business issues and declining revenues from its herbicide business. Analysts were expecting a loss of around 32 cents a share.

But executives at Monsanto, which makes herbicides and specialty seeds, said sales of seeds and crop biotechnology surpassed expectations. They painted a bright outlook for the company, which is increasingly focusing on sales of biotech characteristics - or traits - for crops.

"What we delivered today reflects tomorrow's promise," said chief financial officer Terry Crews in a conference call. "Our seeds and traits business outpaced our expectations."

Third-quarter net sales for the seeds and genomics unit improved more than 50 percent to $1.1 billion, Monsanto said.

Net company sales surged 22 percent in the quarter to more than $2 billion.

Despite the poorer-than-expected forecast for the fourth quarter, Monsanto sales "appear healthy, with a good mix," said Banc of America Securities equity research analyst Kevin McCarthy.

Roundup Ready soybeans, engineered to withstand weed-killing treatments, remained the company's most popular biotech product, though growth was also seen in herbicide-resistant corn and other genetically modified cotton and canola seeds.

Monsanto said its biotech beans were planted on nearly 120 million acres this year, and biotech corn was planted on nearly 53 million acres.

But the company's net income was trimmed by 91 cents a share in the quarter because of the recent purchases of Seminis Inc., the world's largest commercial fruit and vegetable company, and the Emergent Genetics Inc. cotton seed company.

Write-offs associated with research and development at those companies totaled $248 million. As well, the acquisitions helped push operating expenses to $776 million from $458 million in the quarter, compared to a year ago, while income from operations fell 38 percent to $231 million.

Monsanto announced its $1 billion purchase of Seminis from Fox Paine & Co. LLC. in January, and some analysts have pegged the deal as perhaps more pricey than warranted, but Monsanto maintains that the seed and vegetable company will be a key long-term growth vehicle.

The downturn expected in the fourth quarter is partly seasonal in nature with seed sales slowing as key farm crops, like corn and soybeans, are harvested. Declining revenues from Roundup and other herbicides are also among the factors, according to Monsanto.

Monsanto reiterated its forecast of a growth rate of 17 percent in 2006 over 2005 earnings, which are pegged at $2.00 to $2.05. It predicted a 20 percent to 25 percent growth rate for fiscal 2007.
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2.Clash over GM Seeds Brings Private Eyes, Angst - and Lawsuits
6/28/2005
http://www.soyatech.com/bluebook/news/viewarticle.ldml?a=20050628-6

The National Law Journal via NewsEdge Corporation : A legal war has cropped up between dozens of American farmers and a bioengineering company over who owns the right to replant patented soybean seeds.

In the last six years, St. Louis-based Monsanto Co. has filed nearly 100 lawsuits against farmers in 25 states, alleging that they replanted Monsanto's patented "Roundup Ready" seeds saved from the prior year's crop, in violation of a purchase agreement.

Monsanto officials said that most of those suits have settled for an average of $88,500, with eight lawsuits remaining in Missouri, Mississippi and Alabama.

Farmers' advocates argue that Monsanto has unfairly used patent law to bully farmers into ending a centuries-old farming tradition of replanting saved-up seeds. That argument has been put to the U.S. Supreme Court, which on June 23 is expected to grant or deny certiorari to Mississippi soybean farmer Homan McFarling. In April, McFarling was ordered to pay $278,000 to Monsanto for replanting patented seeds. McFarling v. Monsanto, No. 04-31.

"The process of replanting is a natural process. It can't be patented. That's fundamentally what we're saying....What God has made, Monsanto can't patent," said attorney Jim Waide of Waide & Associates in Tupelo, Miss., who is handling McFarling's appeal to the high court. He is also handling two other seed piracy lawsuits. "As long as farmers have existed, they've been able to save their seed."

Technology benefits 400,000

But Monsanto officials argue that they have the right to protect a technology that benefits up to 400,000 farmers a year. Monsanto's "Roundup Ready" seeds are favored by many soybean farmers because they are resistant to weed killers.

Monsanto officials contend that the patent on that technology extends to second-generation seeds because the technology is carried through. Furthermore, they argue, customers know they can't replant the seeds because they sign an agreement stating they won't do so as a condition of buying the product.

"What Monsanto has done is they haven't taken anything away from the farmer," said Monsanto spokesman Scott Vaucum. "Monsanto has brought additional resources to the market. We developed some unique seed technologies, and with new benefits come new responsibilities. The vast majority of farmers have said, 'I understand.' But there are those who have said, 'I want the new value and I don't want to understand the new responsibilities.' "

Gone too far?

But farmers' advocates argue that Monsanto has gone too far in weeding out patent violators.

Attorney Joseph Mendelsen III, legal director for the Center for Food and Safety, a nonprofit group that has monitored the ongoing seed-piracy litigation, said that Monsanto is using patent law as a weapon against the American farmer.

According to a January report issued by the center, Monsanto has filed 90 lawsuits-most of them since 2000-against 147 American farmers in 25 states.

The report also showed that total recorded judgments granted to Monsanto for lawsuits amount to $15.2 million, the highest being $3 million; farmers have paid a mean of $412,000 for cases with recorded judgments; and the median settlement is $75,000.

Mendelsen criticized Monsanto's investigative tactics, which include hiring private investigators to spy on farmers and taking anonymous tips on a hotline.

"Farmers used to be neighbors with one another. Now they're asked to...rat out their neighbor if they think they're replanting that seed," Mendelsen said.

Mendelsen accused Monsanto of intimidating and scaring farmers with expensive lawsuits, forcing them to settle rather than fight it out in court.

But some are sticking it out.

North Dakota farmer Loren David is accused of replanting Monsanto seed. His case is currently pending in a Missouri federal court, far from his home state, and home to Monsanto's headquarters. Monsanto v. Loren David, No. 4:04 CV 00425 (E.D. Mo.). Asked why David has not settled, his attorney, Bruce E. Johnson said, "[h>e's stubborn, and Loren says he doesn't feel like he did anything wrong." Johnson, of the Culter Law Firm in West Des Moines Iowa, added, "Loren says he knows what he planted and it wasn't saved 'Roundup Ready' seed. Monsanto takes a different position.

Monsanto's Vaucum defended the company's hotline, as well as hiring private eyes to investigate cases of alleged seed piracy, arguing that patent infringement is a tough crime to detect.

"Unfortunately, when it comes to patent infringement, it's left to the patent holder. It's upon us to do our own enforcement," Vaucum said. "This is very difficult for us as we would much rather have a conversation with a grower."