As "new-economy" technology stocks were mauled last week, the shares of E.I. du Pont de Nemours & Co., an "old-economy" company renowned in chemistry, physics and biology, rose sharply and held on for a small gain. DuPont, which closed Friday at $56.55, has risen almost 25% in the last month.
DuPont's rebound reflects new respect for the strengths and adaptability of traditional companies. In DuPont, investors perceive a deep base of technological abilities, innovative moves in the new industrial environment and, most of all, a sense of mission that this venerable firm will move forward with growing sales and earnings worldwide.
DuPont's earnings per share have been "essentially flat" for the last four years, Chairman Charles "Chad" Holliday concedes in the company's annual report. No surprise that DuPont stock was in the doldrums; even after last month's rise, the share price is still below what it was in 1997.
"I do not consider this lack of growth acceptable," Holliday said in an interview.
So he and DuPont are doing something about the company's stalled fortunes in ways that show the folly of labeling companies "new" or "old" economy.
Successful companies clearly are going to have both the strengths of traditional industry and the quick savvy of the new.
DuPont illustrates the difficulties of dealing with the rigors of a speeded-up world economy and the pressures of an impatient stock market.
The company's advances in science are as exciting as ever. DuPont today is working in "microbial systems" to make biological molecular structures part of the manufacturing process, in Holliday's words. For a new type of polyester that will stretch and recover the garment's original shape, DuPont is using polymers of corn instead of traditional petrochemicals. It is also using tobacco plants to make plastics.
Such advances will provide new products for the company during the coming decade.
But meanwhile DuPont is depending on its traditional strengths in chemical products, specialty fibers such as the stretch fabric Lycra, home construction innovations such as Tyvek material and the venerable fiber nylon, which is finding new uses in automotive air bags.
Indeed, traditional chemicals, fibers, pigments and coatings provide roughly 75% of DuPont's income, which came to $2.8 billion last year before special accounting related to the company's sale of Conoco oil company.
