WMX to cut jobs, scale back operations Shareholders pressure for change, want more

February 05, 1997|By BLOOMBERG BUSINESS NEWS

OAK BROOK, Ill. -- Under heavy shareholder pressure, WMX Technologies Inc. yesterday said that it will cut as many as 3,000 jobs, sell $1.5 billion in assets and retrench overseas in a sweeping effort to return to its roots in the trash-hauling business.

The company said it will take fourth-quarter charges of $680 million for the moves, on top of a loss from continuing operations of $160.3 million, or 33 cents a share. It also reduced expectations for this year and 1998.

The changes weren't enough for some major shareholders who have been demanding that the company focus on collecting trash and hazardous waste solely in North America, and overhaul its executive suite.

"We need and deserve better plans, better results and better management," said Nell Minow, a principal of Lens Inc., which holds about 187,000 WMX shares. Lens and a group led by investor George Soros have been among the most outspoken critics of WMX's leadership.

Shares of WMX stock fell $3.125, or 8.7 percent, to $32.75, after the company said it will earn about $1.75 this year after restructuring, less than the $2.07 analysts were forecasting.

WMX's board is under pressure to boost the company's earnings and stock price, which trades at about the same level it did in the late 1980s. That's when the company embarked on an ill- fated expansion into scaffolding, and engineering and consulting services.

WMX said yesterday that it will make changes aimed at making it the No. 1 or No. 2 company in its domestic and international markets. To that end, it will sell the rest of its Rust International engineering unit, and sell or find partners for operations in France, Spain and Austria.

The company said it will keep control of its Wheelabrator Technologies Inc. and London-based Waste Management International PLC units. Both are publicly traded.

Ned Shadek, an analyst and portfolio manager at Newbold's Asset Management, said it would have made more sense for WMX to buy back the publicly held stakes in the companies, but failing that, to get rid of the units.

Newbold's owns about 3 million WMX shares.

WMX also named as chief operating officer 44-year-old Joseph Holsten, who was chief executive of its international subsidiary. Chief Financial Officer James Koenig, 49, a target of shareholder displeasure, was reassigned to a high-level administrative position.

Koenig will be replaced as CFO by John Sanford, 43, former chief financial officer of WMX's Wheelabrator Technologies Inc. unit.

"The management changes are to pacify shareholders who've been grumbling," said Michael Hoffman, an analyst at Credit Suisse First Boston. "Psychologically, it's a good move."

WMX will buy back at least $1 billion of stock and ask shareholders to rename the company Waste Management Inc., which it operated under from 1971 to 1993.

"People really need to digest the totality of what's been announced here," Sanford, the new CFO, said in an interview. "We're trying to set expectations we think we can achieve."

WMX said yesterday that it expects to cut 1,200 jobs this year, with the rest coming in the next two to three years through attrition, early retirement and firings. In all, the job cuts represent about 4 percent of WMX's 73,000 workers at the beginning of 1996.

This year, WMX expects profits of $1.75 a share, and $2.05 in 1998. It expects 1997 revenue to be flat.

In the latest quarter, the company posted a final loss of $461.3 million, or 95 cents a share, including profit from discontinued operations of $153,000 and losses from discontinued operations of $301.2 million, or 62 cents.

Revenue rose 3.8 percent to $2.34 billion from $2.25 billion a year ago.

Pub Date: 2/05/97

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