MYG article from the nytimes:
David Barbazoa
<<CHICAGO -- For the last three years, Maytag Corp. has been a Wall Street darling.
Sales of its new line of expensive washing machines, ovens and vacuum cleaners were booming, new features were a hit with gadget-loving customers, and Maytag's stock price was rocketing, enough to win its new chairman and chief executive, Lloyd Ward, a spot on the cover of Business Week.
But Friday, Maytag felt the ferocity of investor anger. Its shares tumbled more than 26 percent after the company warned that third-quarter earnings would come in well below earlier projections, because of weaker-than-expected sales of its lower-priced appliances.
Maytag's shares lost $14.8125 to close at $41.75 in heavy trading on the New York Stock Exchange.
The sharp selloff was part of a weeklong decline that left the shares down 35.3 percent on growing concern that Maytag executives may have been masking a slowdown or exaggerating growth prospects.
Despite assurances made to Wall Street analysts earlier in the week that the company's earnings were right on track, some analysts said that rumors of more difficult times had pushed the stock price down ahead of Friday's announcement. The volume was so unusually high Thursday that the New York Stock Exchange asked the company for an explanation.
The company did not respond to that request. But early Friday, before the market opened, Maytag officials released a statement that said that rather than strong growth in the third quarter, earnings would be flat from a year ago, at about 84 cents a share, down from analyst projections of 99 cents a share, according to First Call/Thomson Financial.
"We've seen share erosion at the low end of the market," said Thomas Schwartz, a spokesman at Maytag, which is based in Newton, Iowa. "We still have strength at the premium end, but that strength wasn't enough to make up for the value end."
The company said that its strong growth and healthy gains in market share in recent years were driven by a revamped operation that emphasized innovative, high-end products, such as the Blodgett Commercial oven and the Neptune washing machine -- products that bolstered profits and sent a stock that was trading at $20 a share in 1994 up to nearly $75 last May.
The company's discount line of products, however, has not been rebuilt and those products are now rapidly losing market share to lines produced by Whirlpool, the nation's biggest maker of home appliances, and GE Appliances, the No. 2 competitor.
"They've been focusing on the high end," said Efraim Levy, an analyst at Standard & Poor's Equity Group. "But while some of their strategy is right, it's a multifront battle, and they are missing out on the back end. They should have known about this.">>
Rest is at: nytimes.com |
