Manufacturing conglomerate 3M Co., whose brands include Scotch tape and Post-it notes, reports earnings for the first quarter on Friday before the opening bell. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: The diversified manufacturer, which also makes asthma inhalers, film used in LCD televisions, electrical products, among a long list of other offerings, waited only a day after the close of the first quarter to announce it would be cutting an additional 1,200 jobs, or 1.5 percent, because of the global economic slump.
Then, less than weeks later it offered some 3,600 employees, or 11 percent of its work force, early retirement packages. 3M did not say how many employees it hoped would take the voluntary package by May 31, or how much it expected to save if employees opted to retire earlier than planned.
3M is expected to provide further details when it reports its first-quarter results Friday.
The latest round of jobs cuts follows 3M's decision to eliminate 2,400 jobs in the fourth quarter to save $235 million this year. The company has also made several efforts to trim costs including deferring merit pay increases and modifying its policy on banking vacation days. The company plans to cut capital spending by about 30 percent this year and conserve cash aggressively.
During the quarter, 3M's board raised the company's regular quarterly dividend 2 percent to 51 cents but suspended its $7 billion stock repurchase program in an effort to preserve cash.
BY THE NUMBERS: Analysts surveyed by Thomson Reuters expect 3M to post quarterly earnings of 86 cents per share on revenue of $5.22 billion.
ANALYST TAKE: Following 3M's announced buyout, Frost & Sullivan analyst Dilip Sarangan said efforts by the company to conserve cash over the past two months is meant to protect it from the recession. It is also an early indication that 3M does not expect to do well this year, he added.
"The company is not growing at this time and trying to keep its profits as close to analyst expectations as possible," he said.
WHAT'S AHEAD: Analyst Jeffrey Sprague of Citigroup warned of some risk to 3M, which has broad exposure to the U.S. economy, due to increasing earnings volatility and reduced visibility.
"The company is highly sensitive to global macroeconomic conditions," said Sprague, in a recent note to clients. "Weakness in global industrial end markets and tightening credit conditions could negatively impact results."
STOCK PERFORMANCE: The stock fell nearly 14 percent in the first quarter to end the period at $49.72. The stock has traded from $40.87 to $82.20 over the last 52-week period.
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