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Dial mulls selling business
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September 21, 2000: 2:06 p.m. ET
Consumer products maker issues 3rd earnings warning this year
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NEW YORK (CNNfn) - Dial Corp., whose brands include Dial soap, Renuzit air freshener and Purex detergent, warned Thursday that it expects third-quarter earnings to come in well below expectations and that the company is considering selling all or part of its businesses.
Dial said it expects third-quarter earnings of 3 cents-to-5 cents a share before one-time charges and 50 cents-to-55 cents a share for the full-year 2000.
 The expectations are well below consensus estimates compiled by earnings tracker First Call, which had anticipated the consumer products maker would earn 14 cents a share for the third quarter and 63 cents a share in 2000.
Dial (DL: Research, Estimates) earned $116.8 million, or $1.17 a share, in 1999.
Dial Chairman and CEO Herbert Baum disclosed these expectations during a meeting with financial analysts Thursday. The warning is the third this year that the company would miss expectations. In June, Dial said it would miss its target by as much as 30 percent in 2000.
Baum, who became Dial's CEO on August 14, told analysts the company has received offers to buy all or part of its businesses. Baum became chief executive after Dial ousted CEO Malcolm Jozoff and CFO Susan Riley.
"We have had preliminary conversations for some or all pieces of Dial Corp.," Baum said. "There is no news there. There is nothing we have heard that we have liked."
Dial is considering four options, including remaining independent, forming a strategic alliance with a similarly sized business, selling parts of the company, and selling the entire company.
"There are no sacred cows," Baum said. "We will respond to all inquiries. We talk to everybody."
Reorganization
To improve performance, Dial Corp. has reorganized itself into business units, where general managers will have more responsibility, Baum told analysts.
The company has also stopped all trade loading, Baum said, referring to the practice of giving special discounts on products at the end of the quarter in order to boost sales.
"People wait to get the special discounts," a Dial Corp. spokeswoman said. "This skews sales."
Baum highlighted particular problems the company is facing. Scottsdale, Ariz.-based Dial has discontinued its Nature's Accent personal care line and private label specialty soap because both were unprofitable.
The company's specialty personal care unit, which includes Freeman Cosmetics, Natures Accents and Sarah Michael personal care products, has performed poorly, Baum said. The company is also facing a price war in Argentina with premium brands from Procter & Gamble (PG: Research, Estimates) and Unilever NV (UL: Research, Estimates) priced the same as Dial's value brands.
Dial's joint venture with Germany's Henkel KgaA, which produced the enhanced detergent, Purex Advance, has also not worked out as anticipated.
"We are adding high-tech moves to a Purex product line which flies in the face of what it stands for -- which is a value brand," Baum said. "I'm not sure this is what we want to do."
Dial needs to focus on its core products -- Dial soap, Renuzit air freshener and Purex detergent -- before it can consider selling any of its business or any of its other options, Dain Rauscher-PCG analyst John Hughes said.
"They need to get back on track and focus on what they do well," Hughes said. "They have a good, defensible position. Once they get the business back on track then they can consider some of the potential options."
Hughes had expected Dial to earn 12 cents a share.
"I'm not sure that there is anyone that would want to take on the company, given the current circumstances," Hughes said.
Dial gained 62 cents to $11.19 in midday trading Thursday. 
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