Dividend.com: Johnson Controls to Cut Jobs
09/03/08 - 01:09 PM EDT
Tom Reese and Paul Rubillo
Johnson Controls to Cut Jobs
Building and automotive systems manufacturer Johnson Controls (JCI Quote - Cramer on JCI - Stock Picks) said it plans to cut jobs and consolidate manufacturing facilities as part of a plan to restructure its operations. The company plans to take a pretax charge of $450 million to $500 million in its 2008 fiscal fourth quarter. The actions target reductions in the company's cost base by decreasing excess manufacturing capacity because of lower industry production and the continued movement of vehicle production to low-cost countries, especially Europe. The company didn't indicate the number of jobs it will slash, but did say the moves should be completed by early 2010. We have avoided auto-related companies as the sector continues to deliver nothing but disappointing news to investors quarter after quarter. When the sector does start to show some life, we do believe Johnson Controls is one of the companies to watch. Johnson Controls has a 1.66% dividend yield, based on its closing stock price Tuesday of $31.39. Johnson Controls isn't a recommended dividend stock at this time, holding a Dividend.com rating of 3.2 out of 5 stars. Joy Global Shares Lower Joy Global Inc. (JOYG Quote - Cramer on JOYG - Stock Picks) seemingly did everything right last quarter, but the stock is falling Wednesday. The company said sales jumped 47% to $903.8 million on strong demand for its mining equipment products and services. The company's bookings in the third quarter more than doubled from the prior year to $1.5 billion, reflecting the combination of continued strength in the international markets and a resurgence of the U.S. underground coal market. Orders for original equipment increased more than threefold, while aftermarket orders rose 40%. Underground equipment orders also increased 89% to a record $743 million in the quarter. The company raised its 2008 earnings guidance to $3.37 to $3.52 a share, up from a previous forecast of $3.15 to $3.30 a share. The consensus estimates are for the company to make $3.29 a share. We removed the stock from our recommended list on July 22, when shares were trading at $65.75. We were concerned back then that the cyclical nature of the commodity business was beginning to take its toll. Stocks like Joy Global were losing the expected pop from any good news the company might issue, which is usually a sign that the tide is turning. We would caution long-term investors to avoid trying to catch a bottom in the shares, but do think shorter-term investors that are nimble enough may be able to maneuver in and out of the shares on any major swings. The company has a dividend yield of 1.06%, based on Tuesday's closing stock price of $68.97.
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