NEW YORK – Aerospace and home security systems company Honeywell International Inc. said on Monday it would take a charge of up to $1 billion against earnings as it cuts jobs and facilities amid a weak economy.
Larry Bossidy, who became chief executive after Honeywell's proposed takeover by General Electric Co. fell through in July, said the company will have cut 16,000 jobs, or 13 percent of its work force, by the end of 2001.
By year-end, Honeywell will also have closed 51 sites, Bossidy told financial analysts.
Of the third-quarter charge, about $400 million to $500 million will be related to furloughing 10,500 people. The charge also will consist of about $300 million for relocating and disposing some facilities and $230 million related to environmental issues, Bossidy said.
The move comes after Honeywell took $651 million in charges in the second quarter related in part to its abandoned deal with GE. Honeywell reported second-quarter earnings of $50 million, or 6 cents per share, including the charges. Operating earnings fell 26 percent for the period.
For the third quarter, analysts peg Honeywell at a profit of 48 cents per share, with estimates ranging from 43 cents to 55 cents per share, according to tracking firm Thomson Financial/First Call.
Bossidy made no specific comments on the outlook for earnings per share for the third quarter.
Shares of Honeywell, a component of the Dow Jones industrial average, were up $3.04 to close at $27.84 on the New York Stock Exchange.
Bossidy said several businesses were not core to Honeywell, whose products range from aircraft electronics to home security systems, and that they would likely be sold off.
``We're carrying several properties that are not core to us,'' Bossidy said.
Those operations include friction materials, pharmaceutical chemicals, truck brakes, fire and security products distribution, duracraft control product line and aerospace technical services, he said.
But the chief executive noted that the current market environment would not allow Honeywell to divest those operations immediately.
The CEO reiterated that Honeywell was not for sale -- a statement first made when he was brought on board in July with a one-year commitment.
``It won't be sold on my watch,'' Bossidy said, adding that he intended to leave when his one-year commitment was up.
After prodding from analysts during a question-and-answer segment, Bossidy said he would fulfill his responsibility to bring any acquisition offer to Honeywell's board for review, but that he never intended to position the company for a merger.
``I'm not going sit through that,'' he said. ``I don't think there's any need for it.''
Bossidy was chairman and CEO of AlliedSignal from 1991 to 1999, when he became chairman of Honeywell following the merger of the two companies. AlliedSignal adopted the Honeywell name following the deal.
Bossidy said that at Honeywell's aerospace business, costs were too high relative to product demand. He also said Honeywell, like its competitors, will be pressured by the airline industry's operating environment.
Honeywell plans to have cut 5,000 positions of a total 37,500 at the aerospace business by the end of the year, for a cost benefit of $300 million.
But the aerospace operation could gain from discussions with federal regulators on beefing up security in U.S. airports and aboard commercial aircraft.
Modifications to cockpit safety and avionics systems would be relatively inexpensive for air carriers, at a cost of about $100,000. But it represents a $500 million to $700 million opportunity for Honeywell, the CEO said.
``We have a lot of offerings that we are currently displaying to the FAA (Federal Aviation Administration),'' Bossidy said.
Honeywell's stock took a hit last week, in the first series of trading sessions since the Sept. 11 attack on the United States. Analysts and investors had said companies supplying parts and systems to airlines would be hurt by the crisis among commercial air carries due to a reduced flight schedule and higher security costs.