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To: yard_man who wrote (36859)	11/13/2000 1:10:40 PM
From: MythMan	Read Replies (1) \| Respond to of 436258

This could explain that to some extent... Nov 13,2000 >>Honeywell Faces Dim Revenue Outlook Through 2001 on 4% Aerospace Growth By Andy Pasztor Staff Reporter of The Wall Street Journal Honeywell International Inc., which has agreed to be acquired by General Electric Co., faces gloomy revenue prospects through the end of 2001, with internal company projections showing relatively weak 4% growth for its core aerospace unit, according to people familiar with the details. While Honeywell hasn't yet issued guidance to Wall Street on next year's anticipated revenue, analysts and industry officials said aerospace growth could fall below that projection, and they also expect several other segments to report flat or declining revenue next year. The focus on lagging sales comes as the technology and manufacturing company has abandoned previously announced plans to shed slower-growth, less profitable businesses -- including certain automotive, specialty-chemicals and security-monitoring operations -- that account for about 10% of its $24 billion annual sales. The anemic revenue outlook is the latest indication that the 1999 merger of what was then Honeywell Inc. and AlliedSignal Inc. has failed to produce the kind of balanced, robust growth that proponents had hoped. Many of Honeywell's nonaerospace businesses continue to struggle. Its most promising aerospace lines, accounting for about 40% of all sales and considered the spark plug of the company, have continued to report hefty profit margins. But aerospace revenue has slumped partly because of reductions in commercial-jet production. It was down nearly 3% from year-earlier levels in the third quarter, prompting Chairman and Chief Executive Michael R. Bonsignore to acknowledge at the time that promised synergies in the aerospace segment generally had been "more of a promise than a reality." On Friday, Honeywell disclosed that it has changed course and will retain all the assets previously placed on the auction block. A two-paragraph Honeywell statement said the sales were abandoned "based on its recent agreement" to be acquired by GE in a deal valued at $45 billion when announced in October. Officials for the Morris Township, N.J., company declined to elaborate. But one person familiar with the matter said the disposal plans were scuttled partly out of concern that they could turn into "a distraction for management" during the pending transaction, as well as to give General Electric maximum flexibility in shaping the combined entity. At least one of the areas slated for sale, Honeywell's fine-chemicals businesses, is seen as a complement to GE's own chemical operations. The GE acquisition of Honeywell is expected to close during the second half of next year, subject to regulatory approvals. During the weekend, a Honeywell spokesman said it would be premature to comment on revenue projections. Senior executives were scheduled to hold meetings this month to agree on revenue targets, and analysts are expected to receive guidance in the next few weeks. Cost-cutting, job reductions and other efficiencies are expected to boost 2001 margins and net income. However, without a significant upturn in aerospace and other revenue in 2001, analysts say it may be difficult for Honeywell to meet the 10% to 15% increase in year-over-year earnings the company has projected. Just days before the deal with GE, of Fairfield, Conn., was struck, Mr. Bonsignore told analysts he was committed to quickly completing asset sales amounting to roughly $4 billion. Arguing that such moves would demonstrate the company's resolve to focus on more-promising businesses and deliver "predictable" revenue growth, Mr. Bonsignore even talked about initiating a second round of potential divestitures at the end 2001 or later. But anemic revenues, which already hammered Honeywell's stock earlier this year, pose a seemingly more important long-term problem than the change of heart on asset disposals. Overall revenue in the third quarter was up only 3% from a year earlier, which the company acknowledged was a major disappointment. In the current quarter, companywide revenue is expected to grow only about 2%, excluding impact of acquisitions and divestitures. <<