January 29, 2009 / 5:26 PM / 10 years ago

UPDATE 2-Black & Decker sees weak 2009, to cut 1,200 jobs

* Q4 adj EPS $0.97 vs est. of $0.70

* Sees Q1 sales down 20 pct

* Sees Q1, FY09 EPS below estimates

* To cut 1,200 jobs

* Shares fall 18 pct to a 7-yr low (Recasts; adds details from conference call, updates share movement)

Jan 29 (Reuters) - Tool maker Black & Decker Corp BDK.N warned of a double-digit fall in organic sales for the first three quarters of 2009 on weakening demand, and said it would cut 1,200 jobs, sending its shares down 18 percent to a seven-year low.

The company, which reported a better-than-expected fourth-quarter profit, said it expects first-quarter sales to drop about 20 percent on lower demand, likely retail inventory adjustments and unfavorable currency.

On Wednesday, another tool maker Stanley Works (SWK.N) posted better-than-expected quarterly results but declined to provide 2009 outlook, citing economic uncertainty.

Black & Decker sees earnings per share of 5 cents to 15 cents for the first quarter and $1.75 to $2.25 for 2009. Analysts were looking for 76 cents, before items, for the first quarter and $3.68 for the full year.

Free cash flow will also be much lower in 2009 due to weaker earnings, compared with $347 million in 2008, the company said.

Robert W Baird analyst Peter Lisnic, who termed the outlook “abysmal,” said demand at the company’s core segment, power tools, remained bleak. Sales at the segment fell 13 percent for the quarter.

He cut his price target on the stock to $40 from $49, but maintained his “neutral” rating, and said the company’s cash generation ability was also diminishing.

Black & Decker, which has eliminated over 2,900 positions since the fourth quarter of 2007, said it was continuing to evaluate more cost reductions.

It might also change its dividend payout policy if the situation worsens, the company said.

For the fourth quarter, however, the company posted better-than-expected profit helped by lower tax rate and interest expense.

It reported net income of 73 cents a share, compared with $2.94 a share a year ago.

Excluding items, it earned 97 cents a share, above market estimate of 70 cents. Revenue fell 17 percent to $1.38 billion.

Shares of the Towson, Maryland-based company fell $6.32 at $32.42 in midday trade Thursday on the New York Stock Exchange. They touched a low of $31.84 earlier. (Reporting by A.Ananthalakshmi in Bangalore; Editing by Savio D’Souza and Deepak Kannan)

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