Ahead Of The Bell: Graco Drops Premarket

NEW YORK (AP) — Shares of fluid control products maker Graco Inc. dropped in premarket trading Thursday a day after the company said it is cutting jobs as demand for its products shrinks.

The Minneapolis-based company said it would cut 180 jobs, or 8 percent of its work force, as incoming orders for the first quarter were 40 percent lower from the same time last year.

Since December, the company has shrunk its labor force by 15 percent, and will save about $18 million, or 20 cents per share annually, said KeyBanc Capital Markets analyst Matt Summerville.

He cut his earnings estimate for 2009 by 50 cents to $1.10 per share and maintained a "Hold" rating. In 2008, the company earned $2.03 per share.

Construction and industrial sectors remain weak, Summerville said, and customers dealing with tighter capital budgets will continue to hurt Graco's earnings as the global recession wears on.

Graco shares slid 6.3 percent, or $1.16, to $17.39 in premarket trading. They rose $1, or 5.7 percent, to $18.55 on Wednesday.