JCI--interesting Milwaukee article here
<<Despite record sales and earnings, Johnson Controls Inc.'s stock took a major beating Tuesday, falling $6.188 a share or about 9.5%.
Analysts said the state's largest manufacturer may either have been a victim of its own success or of momentum buyers selling off at what they considered the peak.
The Glendale-based maker of automotive interiors and batteries, which also has a large facilities management and controls business, reported record quarterly and annual figures.
Sales hit $16.1 billion for the year, up 28% from 1998. Meanwhile, net income rose 24% to $419.6 million, or $4.48 a share, from $337.7 million, or $3.63.
In the quarter, net income hit $130.5 million, or $1.38 a share, up from $101 million of continuing operations, or $1.09, a year earlier. In that quarter, a $35 million gain for the sale of its plastics division boosted net income to $136 million, or $1.47 a share.
The quarterly figures matched the analysts estimates, according to First Call Corp.
But that may not have been good enough, several analysts said.
Johnson Controls has beat analysts estimates for several quarters and some might have been expecting a repeat performance, said Ronald Tadross of Prudential Securities in New York.
The company had told analysts in September that it was on target to meet their numbers, but Tadross said there were whispers on Wall Street that Johnson Controls stillmight outperform the estimates. He added, however, that he was not among the whisperers.
Neither were any of the other analysts contacted Tuesday.
"I'm as perplexed as anybody," said Kurt Rivard, an analyst with Robert W. Baird & Co. Inc. in Milwaukee. He noted that after the September conference call a number of analysts actually increased their estimates, meaning the figure Johnson Controls hit Tuesday was slightly inflated from just a month earlier.
Rivard credited the volatile market for some of the big swing.
"The market is extremely short-term oriented these days," he said.
In addition, some analysts said momentum investors, looking for trends in stocks and trying to buy or sell as the momentum changes, may have sold shares due to a statement by James H. Keyes, Johnson Controls chairman and CEO.
In the report he said sales growth may be more moderate in 2000 while earnings continue to grow at a double-digit rate.
David Bradley, an analyst with J.P. Morgan Securities in New York, said analysts believed Johnson Controls expected sales to slow a bit in 2000.
He noted, though, that Johnson Controls has been trading at a premium compared to its peer group of manufacturers. The loss Tuesday brings it more in line with the others and makes for a better buying opportunity for the long run, Bradley said.
Rivard agreed, saying Johnson Controls already is seeing its new business order backlog growing for 2001.
"It has had a premium price, but a big portion of that has evaporated," Rivard said.
"But this is an extremely high quality company," he said, adding that as the automotive supply business continues to consolidate, Johnson Controls is in a strong position to continue acquiring other firms.
Tuesday's numbers show Johnson Controls' automotive systems group led the way with nearly $12.1 billion in sales, an increase of 30% from a year earlier. While strong automotive sales nationwide helped fuel the increase, about one-third was the result of Johnson Controls purchase of Becker Group, a European interior parts maker, in 1998.
The company's controls unit saw non-residential sales increase 22% to nearly $4.1 billion, reflecting sales resulting from the purchase of a firm in Japan and an increase in facilities management contracts.
Johnson Controls' stock closed at $60.438 Tuesday, down from a 52-week high of $76.688 in April, but up considerably from its 52-week low of $45.75, set almost a year ago. Trading volume was 800,900 shares, more than four times its three-month daily average.>>
jsonline.com
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