Black & Decker's profits surge on 4% rise in sales Galli and Simms get key appointments


Continuing to drive costs down and productivity up, Black & Decker Corp. yesterday reported that its third-quarter earnings jumped 48.5 percent even as sales were increasing only 4 percent.

"While our sales gain was slightly smaller than in the previous two quarters, our businesses are performing very well," said Nolan D. Archibald, Black & Decker's chairman and chief executive officer.

Mr. Archibald noted that the Towson-based power tool and appliance maker has dropped some of its low-profit products -- such as low-cost drip coffee makers and irons.

Profit margins improved in home appliances, power tools and accessories, security hardware, glass container-making equipment, fastening systems and the PRC information services division, Mr. Archibald said.

Black & Decker also announced the appointment of Joseph Galli president of the company's worldwide power tool business and Steven E. Simms as president of the worldwide accessories business.

They replace Gary T. DiCamillo, the former president of power tools and accessories, who is moving to another undisclosed company.

Black & Decker, which has been reporting increasing earnings for nearly two years, had a third-quarter net income of $43.5 million, or 46 cents per share, on sales of $1.4 billion. This compares with earnings of $29.3 million, or 31 cents a, share, on sales of $1.3 billion during the previous third quarter.

For the first nine months, Black & Decker's earnings rose by 55.5 percent, to $104 million, or $1.09 per share, compared with net income of $66.9 million, or 69 cents a share, for the corresponding period a year ago.

But, even though the earnings per share outpaced the average predicted by analysts by 3 cents, Wall Street had a ho-hum reaction yesterday, with the stock dropping 87.5 cents, to $34.50 a share.

One reason for the lackluster reaction is because the stock has more than doubled since July 1994, and analysts are concerned that it may be getting too expensive in comparison to similar stocks.

"I think the earnings are very strong and excellent, but I think they are mostly in the stock, already," said Michael L. Mead, an analyst for Legg Mason Inc., a Baltimore brokerage firm.

Mr. Mead, who expects continued earnings increases at Black & Decker through next year, rates the stock as a market performer, meaning that it can be expected to go up and down with the general stock market.

Jeffrey D. Saut, director of research with Ferris, Baker Watts Inc., a Baltimore-Washington brokerage firm, agreed, noting that ratio its stock price to earnings is above the industry average.

"The stock has had a helluva move," he said. "But on a valuation basis, it looks just a tad rich."

However, Clifford F. Ransom, director of special situation research for Raymond James & Associates Inc. in St. Petersburg, Fla., said the stock will continue to rise as the company refines its manufacturing methods and boosts its profit margins.

"My experience tells me that Wall Street has not yet begun to understand the impact of modern manufacturing techniques," he said. "I love it when people are hesitant about Black & Decker. It means my clients get to buy more of it."

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