The Starbucks (SBUX) media blitz continues. The Seattle-based coffee chain reminded investors Friday that it and partner AT&T (T) would roll out WiFi wireless Internet service at company-owned stores nationwide this year. The companies say qualifying AT&T broadband customers will get free WiFi service in more than 7,000 U.S. Starbucks stores. Starbucks dropped T-Mobile for AT&T back in February.

“We continue to build on the experience we know our customers expect from us,” said Starbucks technology chief Chris Bruzzo. “By partnering with AT&T as our U.S. Wi-Fi provider we aim to deliver a better value, greater convenience and seamless connectivity in a mobility centric world to our customers.”

Starbucks has spent recent days emphasizing the many ways it makes its stores customer-friendly. The company yesterday said it was refining its “entertainment strategy,” by giving up day-to-day management of its record label and seeking out “ways to enhance the customer experience through the use of wi-fi and other in-store technology.”

But recent numbers suggest that what customers want at the moment is not a richer experience, but a cheaper one. On Wednesday, Starbucks set off a sharp decline in its shares by slashing 2008 earnings guidance, citing a sharp slowdown in consumer spending in markets such as California and Florida that have been hit hard by the housing slump. CEO Howard Schultz said that while customers are visiting Starbucks stores less often, company research shows “they are not substituting their Starbucks Experience with coffee products from others.” Unfortunately, that sort of loyalty isn’t doing anything for Starbucks’ bottom line right now.

By James Ledbetter

Of all the calamities lately that have befallen Starbucks (SBUX), none is quite so shabby as Thursday’s court ruling that orders the coffee chain to pay back more than $100 million in tips to its foam-slinging baristas. A California Superior Court judge found that the company’s practice of allowing supervisors to share in employees’ tips violates state law, and demanded that Starbucks pay back tips of $87 million and interest of $19 million.

I won’t pass judgment on either the ruling or the law; no doubt the lawyer-haters and the editorialists at the Wall Street Journal will use this as one more example of a class-action system gone mad. Equally predictable is that the company will have to appeal the decision; $1o6 million amounts to 30-40% of Starbucks’ quarterly operating profit, depending on the quarter. It’s also not clear that there is a uniform opinion about the suit among Starbucks employees; some commentators on Jim Romenesko’s Starbucks Gossip site say they are baristas who believe that shift supervisors deserve a portion of the tips, while others are committed to organizing a union.

But if I were a Starbucks shareholder, I would say to management: Make this problem go away. Think of all the reasons that customers have not to buy from Starbucks these days - long lines, expensive drinks, strong competitive choices. There’s no question that these problems are killing the stock - which is trading at below half of its value in 2006 - so you don’t want to add “cheap bastards” to the list. In a probing interview earlier this year with Fortune managing editor Andy Serwer, CEO and founder Howard Schultz seemed very aware that his chains suffer from a PR problem. The perception that his company has its hand in the tip jar will not help fix that.

Forget Starbucks (SBUX). Caffeine-seeking investors will soon have a new coffee stock at their disposal - Folgers. Parent Procter & Gamble (PG) said Thursday it will separate its Folgers unit in a spinoff or split-off transaction later this year. Folgers - which made $350 million in operating income last year on sales of $1.6 billion - employs 1,250 workers and will be headquartered along with P&G in Cincinnati. Folgers has been part of Procter & Gamble for 45 years, but the parent believes it’s time to turn the java unit loose. Purely by coincidence, the decision comes as a looming recession threatens to weigh down consumer spending and big chains like Starbucks cool their growth plans.

“P&G believes the transaction will be good for the coffee business as the business will get greater priority and attention as a standalone company,” the maker of Tide and Crest said in a press release. “This separation allows us to focus on our core businesses and The Folgers Coffee Company to further develop and leverage its brand portfolio in a coffee-specific business model.” Plus, Wall Street will get a chance to decide whether the best part of waking up is Folgers in its cup.

The coffee wars are really heating up now. Starbucks (SBUX), under fire for the last year as rivals like McDonald’s (MCD) took aim at the expensive-coffee market, late Monday said Chairman Howard Schultz, who ran the company between 1987 and 2000, will return to grab the reins as CEO. He’ll replace Jim Donald, whose many stumbles included the inexplicable claim last year that he welcomed McDonald’s arrival in the market. In addition to putting Schultz back in charge, Starbucks is taking a page out of Wal-Mart’s (WMT) by slowing its U.S. store growth, and emulating McDonald’s by promising to put the customer first once again. The company says the changes will have the effect of “refocusing the company on providing customers with the distinctive Starbucks Experience [italics theirs] and building on Starbucks legacy of innovation.” With the stock up 7 percent late Monday, it’s hard to argue with the decision - even if providing customers a better experience will be more difficult than talking up the Starbucks Experience.

The bad news out of Starbucks (SBUX) and FedEx (FDX) has Barry Ritholtz railing about inflation again. On Thursday, Starbucks said foot traffic in U.S. stores dropped for the first time ever in the most recent quarter, as the company boosted prices to offset rising costs. Friday, FedEx cut its earnings forecasts, citing surging fuel costs and weak volume. Ritholtz wonders what other firms might be seeing the same problems and reminds us ominously that while the Fed can cut rates to its heart’s content, “there is no free lunch.”