Shareholders Switch Off Rockwell
Investors dumped shares of Rockwell Automation (ROK: 23.02*, -3.02, -11.59%) after the industrial automation and control systems maker reported weak quarterly results and said 2009 was going to be bad, too. The Milwaukee-based firm said it now expected to make $1.55 to $2.25 a share for the fiscal year. Analysts were anticipating $3.14 a share.
Rockwell Chief Executive Officer Keith Nosbusch said the drop-off impacting his business was sudden and sharp. “After a very solid October, we experienced a severe decline in customer demand during the second half of the quarter,” he said in a Monday conference call. “This was due to deteriorating economic, financial, and credit market conditions in all regions and [it was] aggravated by an unusual number of customer plant shutdowns.”
The manufacturers that buy Rockwell production equipment have cut back on capital expenditures here and abroad, said Sterne Agee analyst Nicholas Heymann. He added Monday that even Latin America, currently one of the company’s few remaining strong markets, is soon expected to slump. Heymann cut his rating on the stock to Sell from Neutral and said the company was now less likely to become a takeover target because it “is viewed as less strategic to other automation suppliers since much of its geographic coverage is in North America and Europe, similar to other larger competitors.”
Bottom Line: Hold
Companies will eventually open up their wallets to buy Rockwell products once there is some transparency about the direction of the economy.
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