No swine flu found in Mexican operations, Smithfield says

Swine flu doesn't come from eating pork.

But that didn't stop fearful investors from selling off Smithfield Foods' shares Monday, driving the price down 12 percent, or $1.28, to $9.04.

The world's leading pork producer said its hogs in Mexico have shown no signs of the flu and echoed health officials' reassurance that it cannot be contracted by eating pork.

Even so, analysts said the mysterious outbreak could infect the company's finances, already ailing because of low hog prices and high grain costs.

For Smithfield, "the impact should be relatively small - except that you're dealing with consumer fears," said John Urbanchuk, a director of LECG LLC, a consulting firm near Philadelphia. "To the extent that consumers overreact to this, it could be quite negative."

The Mexican government has said a 4-year-old boy contracted the virus in Veracruz state, where a community has been protesting pollution from a large pig farm co-owned by Smithfield.

A news release from the Smithfield-based company Sunday night said that it had not found symptoms of the swine flu in its herd or in its employees in Mexico and that it was submitting samples to the University of Mexico for testing. It cited the U.S. Centers for Disease Control and Prevention, which said on its Web site, "You cannot get swine influenza from eating pork or pork products."

Smithfield spokeswoman Keira Ullrich did not respond to e-mail and phone messages from The Pilot. A woman who answered the phone at Ullrich's office said, "We're not expanding on our press release at this time."

Farm Fresh on Monday issued a statement that said, "We want to assure our customers that the pork products in our stores are not connected to the swine flu outbreak."

Likewise, at the National Pork Producers Council in Washington, "our No. 1 message is pork is safe," said Jennifer Greiner, director of science and technology. "You cannot get the swine virus from eating meat. There's no evidence that it has been found in the U.S. pig herd or any herd throughout the world."

Nevertheless, JPMorgan Chase analyst Ken Goldman reduced his earnings estimate for Smithfield for the year.

"Though there is no evidence that swine flu can be obtained by eating pork," he wrote in a research note, "the fear generated by a disease named after hogs cannot be good for pork consumption."

Steve Marascia, a researcher with Anderson & Strudwick, a Richmond brokerage firm, said the effect on Smithfield depends partly on how much more deadly the flu becomes.

"If it doesn't turn out to be a pandemic," Marascia said, "investors will rationally assess these companies that they sold off and realize they had an overreaction."

Daniel Howard, a marketing professor at Southern Methodist University in Dallas, said Smithfield should go beyond a news release and take its case to the public, with advertising, store posters, e-mails and direct mail.

"You need to take people out of their fear and into their intellect," he said.

Bloomberg News Service and The Associated Press contributed to this story.