It's Wall Street's hot-and-heavy earnings season, but it's layoff season too.
A spate of Minnesota-based manufacturers is straddling both worlds this week as investors and employees alike brace for the possibility of more pain.
3M, Graco, Hutchinson Technology and Polaris release fourth-quarter earnings this week, and all are in the throes of cutting expenses and jobs as they scramble for profits amid a wretched global recession and one of the worst U.S. holiday shopping seasons in 40 years.
Last month, 3M Co. reduced its earnings forecasts for 2008 and 2009 and announced a staggering 2,300 job cuts for the fourth quarter, on top of 1,000 cuts in the third quarter. CEO George Buckley warned investors that more restructuring pain was likely.
Now investors are antsy for any sign that year-end results might land with a thud. Analysts note that 65 percent of 3M's sales are made outside the United States, which has helped the diversified manufacturer maintain growth even as the domestic economy slows. But as the recession has spread worldwide, growth is not certain.
Last month, Citigroup and Barclays Capital downgraded stock recommendations on 3M. Today 3M's trading near $53 a share, which is up from its 52-week low of $50.01 but far from its high of $83 a share.
On Thursday, analysts expected 3M's fourth-quarter earnings to be 93 cents a share and revenue of $5.67 billion. Even if 3M meets expectations, few investors will celebrate. Such results would be a decline from fourth quarter 2007, when 3M earned $1.17 a share and $6.2 billion in sales.
While 3M's sales are slowing, revenue at Hutchinson Technology has fallen off the table. The company surprised workers and state officials with 1,380 layoffs earlier this month. Then on Friday, the company announced plans to close its Sioux Falls, S.D., plant and lay off the 300 people who work there.
Hutchinson Technology makes a suspension assembly device widely used in computer hard drives. But global PC sales have fallen as tightfisted consumers and companies both defer replacing their hardware. Seagate, the California-based disk-drive maker and an important customer of Hutchinson Technology, announced plans to cut its U.S. workforce by 10 percent.
Underscoring the PC slump, software giant Microsoft last week said it would trim 5,000 jobs.
Hutchinson's shares are trading below $3, down from $24 a year ago. Analysts don't hold high hopes. They're forecasting a 94-cent loss per share for the fourth quarter and a 29 percent drop in sales, to $123 million, when the company posts results Tuesday. For the year, analysts predict a $2.56 loss per share on deflated revenues of $472.8 million.
Industrial firms also have been hit hard. Last month, Minneapolis-based spray-gun maker Graco shed 150 workers as demand declined for its fluid-handling machinery, which is used in factories around the world to apply coatings on manufactured products.
When the company reports earnings Monday, analysts on average expect earnings of 31 cents a share on $176 million in revenues, which is 14 percent lower than a year ago.
On Friday, Polaris announced plans to cut 460 positions consisting of 160 salaried and hourly full-time positions and 300 contractors, part-time and temporary jobs across all its product lines. The cut in full-time workers represents about 5 percent of the workforce. On Thursday, it will post fourth-quarter earnings amid a weakening economy and nervous consumers.
Polaris, which makes ATVs, snowmobiles and motorcycles, had beaten the odds with better-than-expected performance all year. But in a statement Friday, CEO Scott Wine said that "the difficult business environment and uncertain economic situation are having an impact on our business, as well as the businesses of our dealers and suppliers."
Dee DePass • 612-673-7725