The bad news about the cut dividend caused mania sell in the stock which drives down the price by almost 20%. Cutting back dividend isn't necessarily an indication of ominous business prospect. It is an opportunity for the management to pay off loans and reset their options' strike price.

The recent loss of the company mostly come from the merging costs of the two companies. Further more, a bad harvest in Brazil has raisen the cost of tobacco leaves. The company isn't able to pass the rising material cost to the tobacco manufacturer in the mean time.

All that said, the surging cost in the last quarter is more like a cyclical phenomena. At current price of 4.03, the marketing cap is 380.77M. Based on its 10Q filed on August 15, the P/B is 0.64, the current ratio is 1.73; Debit/equity is 3.39, making it more critical to pay off existing loans than giving out dividends.

¶ 10:26 AM

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