2nd-quarter charge to take bite out of Nabisco Snack maker to take hit of $268 million, fire 3,100

June 09, 1998|By BLOOMBERG NEWS

PARSIPPANY, N.J. -- Nabisco Holdings Corp., the biggest U.S. cookie and cracker maker, said yesterday that it will take a second-quarter charge of about $268 million -- three times estimated earnings -- to slash costs by firing about 3,100 workers and closing nine factories.

The maker of Oreo and Ritz snacks will take another $118 million in pretax charges over the next year as it pares its work force by 6 percent. Chief Executive James Kilts will use the $100 million in annual savings to boost ad spending by a third to try to regain sales lost to rival Keebler Foods Co.

The restructuring is Nabisco's second in two years aimed at reducing expenses, costing more than $1 billion in pretax charges.

Nabisco's shares fell 13 percent on the news to a four-month low as investors, who had expected earnings to start rising later this year, were caught by surprise.

Nabisco shares lost $6.0625 to close at $39.875 in trading of 7.3 million shares, almost 18 times the three-month daily average and ranking it one of the most-active U.S. stocks. The percentage decline is Nabisco's largest since it went public in January 1995.

"You can only go to the well once," said analyst Steven Galbraith of Sanford C. Bernstein & Co. "They're trying to go twice. This company is a mess."

Pub Date: 6/09/98

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