Sunbeam Corp. said Friday that it expects to report a loss for the first quarter and has fired a top executive in charge of consumer products, sending its stock into a tailspin.
The home appliance maker's stock lost 25% of its value, closing at $34.38, down $11.19, in composite trading on the New York Stock Exchange, where it was the biggest percentage loser and the most active issue with more than 16 million shares traded.
The Delray Beach, Fla.-based company said last month that first-quarter results would be below analysts' estimates. Friday's announcement said that it expects a loss because of 5% lower sales, significant one-time charges and costs associated with acquisitions of Coleman Co., Signature Brands USA Inc. and First Alert Inc.
In a conference call with analysts, the company said the quarterly loss would include 40 cents a share in charges related to the recent acquisitions, which had a total price of about $2 billion.
Analysts had expected Sunbeam to earn 30 cents a share, compared with earnings last year from continuing operations of $20.6 million, or 24 cents a share, according to research firm First Call.
Sunbeam Chairman Al Dunlap, known for his harsh business maneuvers to return companies to profitability, said in a statement that Don Uzzi, executive vice president of consumer products, had been "terminated."
"We determined that we needed new leadership in the management of our business units," Dunlap said. Lee Griffith, vice president of sales, was promoted to president of the household products unit, he said.
Analysts said after the conference call that the company had damaged its credibility in Wall Street's eyes by not warning of the big loss earlier.
Last month, Sunbeam said it was confident about its first-quarter sales outlook and expected sales to top the $253 million it posted a year earlier.
Sunbeam also on Friday completed the tenders to buy First Alert and Signature Brands, and the mergers will be completed within the next few days.
The integration of the two companies, as well as other recently acquired brands, is part of Sunbeam's strategy to grow through acquisitions, said Dunlap. As a result, 1998 will be a year of "consolidation and restructuring."
"We will get the cost structure right at the recently acquired companies, and, with our recently announced strategy of moving from 70/30 to 50/50 outsourcing, we see even more opportunities for cost improvement," the company said.