Danaher Expands Job Cuts
Manufacturing conglomerate Danaher said Monday evening that it would take further measures to cut costs as the global economic downturn hampers its ability to grow through acquisitions and slows sales.
The company said it would cut a total of 1,700 jobs and close 13 factories in the fourth quarter as well as institute a salary and wage freeze across most of its divisions throughout the world.
The $90 million reduction plan is an expansion of the 1,000 job cuts and 12 factory closings announced in October, reflecting just how quickly the global economic picture has worsened in recent weeks.
Shares were trading at $50.47 after 3 p.m., down $1.49, or 2.9 percent.
"Global economic conditions have continued to deteriorate over the last several weeks impacting many of our customers as well as a number of our businesses," H. Lawrence Culp Jr., president and chief executive of Danaher, said in a statement.
Danaher, founded by brothers Steven M. and Mitchell P. Rales, makes a variety of products, including submarine periscopes and dental hardware, and is perhaps best known for manufacturing Craftsman tools for the Sears department store.
Since taking over as chief executive in May of 2001, Culp has pursued a strategy of expansion by buying companies, expanding the company's presence in the medical and dental industries.
Nicholas P. Heymann, an analyst with Sterne Agee, said that about three-quarters of the company's growth comes from acquisitions, while the rest is derived internally, with much of that business located in the United States and Europe. Heymann said that the combination of the ongoing credit crunch mixed with a global slowdown will yield tough times for the company in the near future.
"The market for significant acquisitions is closed, it is locked up, Danaher has the cash to make them, but there is no agreement on price between buyer and seller," he said. Heymann added: "The suddenness and pervasiveness of the slowdown geographically is now really hitting the organic growth of the company."
Danaher also said that the strengthening of the U.S. dollar against other currencies will hurt its earnings in the fourth quarter. The company said its earnings per share for the fourth quarter are expected to be $1.03 to $1.10, compared with previous estimates of $1.17 to $1.25.
December 9, 2008; 3:26 PM ET
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