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business newsRevlon Has Lots of Ground to Make Up
By
Justin Sharon
Oct 28, 2010 4:45 pm
Shares ended down more than 20% today because of a 46% slide in net income.
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Related content can be accessed at CEOs Gone Wild: Ron Perelman.
As the only place in the nation to vote against Ronald Reagan in 1984, favoring native son Walter Mondale, the North Star State has never had a problem going against the grain. So it's appropriate I suppose that what was once Minnesota Mining and Manufacturing, now known as 3M Company (MMM), is easily the Dow’s worst performer today and is indeed the sole reason why the blue-chip index is trading lower.
The multinational conglomerate, which makes more than 55,000 items including Scotch tape, Post-it Notes, security products, and surgical masks today tumbled by the most since early May after reducing its 2010 full-year profit projection by some $0.06 to at best $5.74 per share. Higher pension outlays and acquisition costs are among factors being blamed, and Sanford C. Bernstein analyst cited the lack of a “beat and raise, in a clean fashion” as being behind today’s share price slide.
While 3M reported revenue rose 11% to $6.87 billion in its most recent quarter, and EPS of $1.53 beat the Street by two pennies, CEO George Buckley called growth in its mature markets “uninspiring” on a company-sponsored conference call with equity analysts. Shares will eventually bounce back but as a critical economic barometer today’s negative guidance does not augur well. At this rate it will take an awful lot of stock to buy back that Post-it artwork that once went for more than a thousand bucks.
3M Buys Biometric Recognition System Company has more.
This may be a gap year in Steven Spielberg’s $1.5 billion grossing Transformers series -- the third installment isn’t out until next summer -- but 2010 hasn’t exactly been lacking in action for fans of automated artificial agents. Iron Man 2 tided legions of teenagers over nicely and today’s action in iRobot Corporation (IRBT) is proving a strong sequel. Shares are surging by double digits on a percentage basis as I write after the company reported robust third-quarter results. Profit better than doubled at the outfit whose contraptions have uses ranging from clearing out murderous Afghan caves to cleaning up messy Manhattan bachelor pads (I can confirm they do an admirable job on the latter.)
In making $7 million, equivalent to $0.27 on an earnings-per-share basis, it comfortably exceeded year-ago results of $2.6 million and $0.10, respectively. Excluding extraordinary items iRobot posted per share earnings of $0.18 , well above consensus expectations calling for $0.07, while revenue rose a tidy 20%. Equally encouragingly on a day of lowered guidance elsewhere -- see 3M above -- it also raised the full-year earnings outlook and now projects a profit of between $0.10 and $0.12 per share on $108 million to $113 million in current quarter revenue.
The stock has been on a two-year tear now and its profit mix is nicely split between consumer uses (roughly 60% of revenue), where its Roomba makes short work of scrubbing floors, and military operations, where an army of small unmanned ground vehicles are often employed to dismantle bombs in war zones. There is potentially no end of applications for the company’s core product. Indeed the past two years alone have seen such machines officiate marriage ceremonies and provide one particularly sad soul with a mechanical wife.
Stepford fembots aside, since Halliburton (HAL) -- whose very stock symbol eerily echoes an earlier example of artificial intelligence from 2001: A Space Odyssey -- has this afternoon put the Gulf oil spill back on the front pages, we must also mention the roles robots played as both heroes and zeros in 2010′s tragedy at 12,000 feet. Defense cuts, such as have just been announced in Britain, could be a concern looking longer term but for now it appears to be all systems go for the stock.
Please see Crazy Business Ideas That Actually Worked: Roomba.
On a day the market is throwing many stocks raspberries, everything is peachy over at One Strawberry Lane. The Orrville, Ohio headquarters of J. M. Smucker (SJM) awoke to news an analyst at Wells Fargo launched coverage on the consumer goods juggernaut at a Market Perform, sending shares up near a new 52-week peak on an otherwise fairly dreary day in equities.
The company’s iconic names are as American as, well peanut butter and jelly, and are in most of the nation’s cupboards. They include Jif, Pillsbury, Crisco, and Folgers, even if I'm among the Starbucks (SBUX) sneering elitists on each coast who are quick to turn my nose up at their coffee. (Or at least out east, since San Franciscans seem not to notice any difference.)
While such staples will always attract less ink than Apple (AAPL), sometimes it pays to be boring. The stock yields approximately 2.50% and its dominant market share is reflected in the fact that more than three-quarters of sales are derived from labels that command the top position in its category.
Risks include an “acceleration” in US food inflation which the US Department of Agriculture predicted only on Monday.
Also check out The Best Part of Waking Up and Deepak Chopra, Men’s Wearhouse Boardmember, Is -- Wait, What?
No positions in stocks mentioned.
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