Faltering Sunbeam Reorganizes Again
By Jennifer Friedlin
TheStreet.com/NYTimes.com Staff Reporter
1/14/00 10:58 AM ET
Sunbeam (SOC:NYSE - news), the highly indebted maker of grills and coffee makers that has been reorganized and dissected twice in the past four years, announced another restructuring plan Friday, but the market didn't seem convinced the formula would drive the company back to profitability.
Sunbeam's stock, which has been languishing below 10 since July 1998, inched higher, rising 9/16, or 13%, to 5 in morning trading. (Sunbeam closed up 11/16, or 15.49%, at 5 1/8.)
The company said it was combining its appliances and personal care business units into its broader household products business unit.
"This new structure will enable us to more effectively leverage the strong potential of our Sunbeam, Oster and Mr. Coffee brands to both consumers and the trade," Chairman and Chief Executive Jerry Levin said in a statement.
Andy Hill, the current president of Sunbeam Personal Care, was named president of the combined unit.
The company also announced that the new household products business division will manage the Sunbeam's health business unit, although the two divisions will remain separate.
Justin Mauer, an analyst with McDonald Investments, said the reorganization seemed to make sense, but noted that it did not address the company's more dire problem, namely the need to refinance billions of dollars in debt.
"Refinancing is key," said Mauer, adding that he would be waiting to see if and how Sunbeam goes about refinancing $750 million in zero-coupon debt. Mauer rates the company a hold. His firm has not done any underwriting for Sunbeam.
The company took on about $2.5 billion in debt in order to finance a buying spree that resulted in the acquisition of number of businesses under the stewardship of former chief executive Al Dunlap, the once-renowned turnaround expert known as "Chainsaw Al" who was forced to resign as the company's performance faltered. The acquisitions made by Dunlap have dropped in value and Sunbeam has been mired in losses.
According to a survey by First Call/Thomson Financial, Sunbeam is expected to post a fourth-quarter loss per share of 41 cents a share and a loss of $1.97 per share for full-year 1999.
Mauer said that in Sunbeam's current financial condition it would be "very difficult" to achieve an accounting profit.
Sunbeam also announced that it would be unveiling its line of "smart" appliances at the International Housewares 2000 show, which starts Sunday in Chicago. Such appliances network automatically and can communicate, such as a bathroom scale that transmit weight data to a physician.
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