3M's Weaker-Than-Expected Quarterly Profit Weighs on Blue Chips
Diversified manufacturer 3M posted a weaker-than-expected quarterly profit on Tuesday and said global economic growth was slowing, sending its shares down and weighing heavily on blue chip stocks overall.
The company also forecast a 2007 profit below expectations.
Investors have worried about a slowdown in the U.S. economy and look to companies like 3M for clues to the future.
3M's net income in the fourth quarter rose 58 percent to $1.2 billion, or $1.57 a share, from $746 million, or 97 cents a share, a year earlier.
"The 3M fourth quarter was an across-the-board miss, with an overwhelming degree of moving parts, the impact of which were poorly communicated by the company prior to the release," JP Morgan analyst Stephen Tusa said in a research note.
Tusa, who has an "overweight" rating on 3M's stock, said the shortfall in the company's display and graphics business, which includes the closely followed optical films unit that serves the liquid crystal display market, was bigger than expected.
In October, the company, considered a bellwether for the U.S. economy because of its extensive product portfolio, had forecast a fourth-quarter profit, excluding one-time items, of $1.10 to $1.16 a share.
3M, based in St. Paul, Minnesota, expects 2007 earnings in the range of $5.20 to $5.45 a share, including a net gain for restructuring actions of about 60 to 70 cents a share.
Excluding one-time items, it sees a profit of $4.60 to $4.75 a share, below the $5 analysts were expecting.