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Rockwell warns on year
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September 18, 2000: 1:22 p.m. ET
Company warns its fiscal year 2000 earnings will miss estimates
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NEW YORK (CNNfn) - Rockwell International Corp. warned Monday that earnings for its full fiscal year will miss Wall Street forecasts, due to weaker sales of automation products.
The warning sent shares of Rockwell (ROK: Research, Estimates) plunging $7.69, or more than 20 percent, to $30.50 in Monday trading.
The company said earnings for its fiscal year ending Sept. 30 will be about $3.35 a share, equal to about 79 cents a share for the fourth quarter. Analysts surveyed by First Call had forecast earnings of $3.44 a share and 89 cents a share for the fourth quarter.
The company, which manufactures electronic controls and communications products, earned $3.01 per share in the prior year.
Automation sales for the fourth quarter 2000 are expected to be down 5 percent versus the same quarter in 1999. Automation was responsible for nearly two-thirds of Rockwell's revenue for the first three quarters of the year.
The company also said first-quarter earnings for fiscal 2001 will be about 20 percent below the 81 cents per share earned for the same period a year earlier, bringing it to about 65 cents a share. Analysts were expecting earnings of 88 cents a share in that quarter.
Rockwell said earnings for fiscal 2001 will be $3.10 to $3.20 a share, well below consensus expectations of $3.76 a share.
Rockwell pointed to delays in automation projects in the automotive industry, which they said was hurting sales in that high-margin segment of its automation business.
"I've been around this business for a number of years and I don' t think I've ever seen something as precipitous as this slowdown," said Don Davis, Rockwell's chief executive, in a call with analysts. Still, he insists this is business that is delayed, not lost.
"We believe the numerous automation projects on their drawing board have not been cancelled and should start to be recorded [in the second half of 2001]," Davis said. He said the company has no indications it is losing market share to competitors.
"We are taking a series of actions to combat these very difficult market conditions in automation controls," Davis said in his prepared statement. "We are completing the realignment of our automation business previously announced in July. Early indications from the realignment are positive as we focus our marketing, sales and product development efforts on areas offering potentially higher growth."
Rockwell said about 7 cents a share of its problems next year are due to the current value of the euro, making it the latest multinational company to see an earnings hit from the lower value of the European currency. A lower euro reduces the money received in products in dollar terms. About a third of its sales are to European customers. 
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