Wall Street tells 3M: We wanted more

3M Co. delivered a good third quarter Thursday, but Wall Street wanted a great one. That and the lack of a rosier outlook for the rest of the year sent the company's stock down almost 6 percent.

CEO George Buckley said near-term growth in the United States and Europe is likely to be "uninspiring." But he said there are no signs of a broad, double-dip recession.

3M lowered the high end of its full-year earnings-per-share forecast by 6 cents because of anticipated earnings dilution related to recent acquisitions. 3M said it now expects earnings to be $5.70 to $5.74 for the year. Analysts have been estimating earnings per share of $5.80.

3M shares closed at $85.07. The stock posted the largest percentage loss among companies that make up the Dow Jones industrial average. About 16.2 million shares changed hands, about four times the recent daily volume.

The Maplewood-based giant reported earnings of $1.1 billion, or $1.53 per share on sales of $6.9 billion for the period ended Sept. 30. Sales increased 11 percent and per-share earnings rose 13.3 percent versus the same quarter last year.

The results narrowly beat estimates by analysts, who had projected sales of $6.8 billion and earnings per share of $1.51 for the quarter.

"It was a very solid quarter,' said Jeff Windau, an analyst at Edward Jones. "But investors have gotten used to companies beating expectations and are looking for something more, for increased earnings guidance. 3M didn't do that."

The company didn't offer specific earnings guidance for the fourth quarter but said the results will continue to be affected by increased raw material prices and costs associated with reducing inventories of films for LCD televisions. The inventory glut, which cost 3M $15 million to trim in the third quarter, is the result of manufacturers shifting away from LCD televisions in favor of LED back-lit models.

Even so, the display and graphics business unit that makes both the LCD and LED films posted a 19 percent gain in sales and 37 percent increase in operating profit for the third quarter. 3M's electro and communications segment, whose products include electronic assemblies for devices like iPads and iPhones, boosted sales 25 percent and operating profit rose 49 percent in the quarter.

The industrial and transportation business unit, the company's largest, posted 14 percent gains in sales and earnings. "The growth is everywhere in industrial," Buckley said in a conference call. Sales of renewable energy products were up 83 percent and sales to automotive manufacturers increased 17 percent.

Sales of H1N1 virus-related products fell off, affecting both the safety, security and protection services segment (sales off 3 percent) and the health care unit, which eked out a 1 percent sales gain.

Sales in emerging markets grew by 25 percent in the third quarter and now comprise 34 percent of 3M's worldwide sales. Sales grew by 48 percent in Korea, 39 percent in India, 32 percent in Russia, 31 percent in the China/Hong Kong region and 25 percent in Brazil. Asia Pacific led all geographic regions with a 28 percent sales increase.

Revenue in 2011 should rise about 11 percent. Analysts estimate that translates to organic sales growth of about 8 percent.