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Honeywell cuts target
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September 18, 2001: 3:06 p.m. ET
Manufacturer says job cuts now to top 12,000; lowers 3Q and '01 guidance
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NEW YORK (CNNfn) - Honeywell International Inc. warned it would miss third-quarter and full-year earnings forecasts, and said it would cut more jobs than previously announced.
The diversified manufacturer, whose products include aircraft engines and parts, said that it expects to earn 43-to-45 cents a share, missing the current EPS forecast of 53 cents by analysts surveyed by earnings tracker First Call, as well as the 76 cents a share it earned a year earlier.
The company also said it is looking at full-year earnings of $2.00 to $2.10, below the $2.20 forecast and the $2.83 it earned in 2000.
The company said it is looking at an overall cut of more than 12,000 positions this year. The company had previously announced up to 8,200 job cuts.
Tom Crane, spokesman for the company, said about three-quarters of the jobs being eliminated have already been eliminated or the affected employees had been notified of the cut.
Shares of Honeywell (HON: down $0.50 to $29.00, Research, Estimates), a component of the Dow Jones industrial average, slipped slightly in trading Tuesday following the warning.
The company said that it does expect a drop in products used by commercial jets, but that segment only accounts for about 15 percent of its business overall.
"Everybody knows that Honeywell has exposure to the air transport industry," said Nicholas Heymann, analyst with Prudential Securities. "I think to some extent that gets mischaracterized because it is offset by defense and space, but the adjust to air traffic (after the attacks) is real."
"There's a near-term impact and we're moving into a more challenging economic environment," Heymann said.
Lawrence Bossidy, who returned as CEO of the company once known as Allied Signal after regulators blocked the purchase of Honeywell by General Electric Co., suggested anticipated military action could help its defense portion of the business and that it could also gain if private jet travel gets a boost from wealthy travelers concerned about commercial jets.
"We expect strong defense aftermarket revenues combined with some renewed interest in business jet travel to partially offset softness in commercial air transport markets," said Bossidy. "These factors plus accelerated cost productivity gains are expected to help offset income lost from the commercial air transport business."
The company said savings from the cuts should save the company an additional $500 million in 2002.
Heymann said Honeywell does not have the spare parts business exposure of General Electric (GE: down $1.08 to $34.07, Research, Estimates) or United Technologies (UTX: up $1.65 to $49.15, Research, Estimates), but original equipment manufacturing (OEM) is going down. 
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Honeywell
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