Emerson, Corporate America's Iron Horse, Warns of Earnings Shortfall

The streak is over.

Emerson(EMR), whose earnings have grown for 43 straight years, warned that it expects to post an 11% decline in fiscal third-quarter earnings, citing a sharp decline in sales in its electronics and telecommunications businesses.

Analysts polled by Thomson Financial/First Call were expecting Emerson to report earnings of 88 cents a share for the quarter ended June 30, compared with its year-ago profit of 87 cents a share. An 11% drop in earnings would result in earnings of about 77 cents a share.

"After careful consideration, our management team made a proactive decision to not continue Emerson's record 43 consecutive years of increased earnings per share," said Emerson CEO David Farr. "We could have pared back restructuring and other investments, or taken other operating actions as we have done in the past, to continue the record. Doing so would not have been in the best interest of the company and our shareholders."

Farr said taking this action now "should position us to return to double-digit earnings-per-share growth sooner than would otherwise be possible."

The company expects cash flow for 2001 to exceed $1.8 billion. Emerson said that its workforce has been trimmed by 6% since the beginning of the year as part of the restructuring plan that has cut into earnings.

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