B&D's earnings forecast disappoints Wall Street

September 24, 1992|By Ross Hetrick | Ross Hetrick,Staff Writer

Black & Decker Corp., the Towson-based maker of power tools and home appliances, told investors yesterday that they should expect the company's third-quarter results to be about the same as the $12 million the company earned in the second quarter.

The stock market reacted badly to the news, sending the price of the stock down $3.125 a share, to close at $16.125 a share.

"The announcement caught Wall Street by surprise," said David S. Leibowitz, senior vice president for American Securities Corp., a New York brokerage firm.

"The rule of the day is take no prisoners," he said, blaming the volatile market for the dramatic drop. "If there is disappointment out there, you dump the shares and ask questions later."

He said the news did not indicate any large problems. "Nothing in the press release indicated any major setbacks," Mr. Leibowitz said. "It would indicate that Black & Decker is coming through these economic hard times in relatively good shape."

Barbara B. Lucas, a company spokeswoman, said analysts had been estimating that third-quarter income would be in the range of $20 million to $22 million.

Black & Decker will release its third-quarter results next month.

The company attributed its stalled earnings growth to the poor economy in Europe and other foreign markets, overcapacity in the worldwide electronics industry and lower-than-expected results in the commercial business for PRC Advanced Systems Inc., a computer systems subsidiary.

"The high interest rate environment, together with currency and trade issues throughout Europe, continue to keep pressure on our consumer and commercial businesses during the current quarter," Nolan D. Archibald, chairman and chief executive of Black & Decker, said in a statement. "Improvements in our U.S. operations will not fully compensate for lower sales and production volume in Europe."

In the 1991 third quarter, the company reported income of $9.7 million, or 16 cents a share, on sales of $1.1 billion.

Black & Decker also has withdrawn its registration for an initial public offering of stock in PRC.

Previously, Black & Decker announced that it was postponing the offering until conditions in the stock market improved.

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