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Black & Decker Drilled

Share slide after the toolmaker says a product recall and the weak U.S. market will hit profits.
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Updated from 9:24 a.m. EST

Black & Decker


slashed its fourth-quarter operating earnings projections amid a product recall and a worse-than-expected slowdown in North America.

Shares recently were down $4.67, or 5.8%, to $75.46. Earlier, the stock hit a low of $71.95, its worst level in more than a year.

The Towson, Md., toolmaker said Friday that it now sees earnings of $1.03 a share for the fourth quarter and $6 a share for the year, excluding a gain from a tax settlement. Previously, Black & Decker forecast fourth-quarter earnings of $1.55 to $1.65 and a profit of $6.50 to $6.60 for all of 2007.

Analysts polled by Thomson Financial project earnings of $1.61 for the quarter and $6.55 for the year.

The company's overall bottom line will actually be better than previously forecast because of a tax settlement with the IRS. Black & Decker anticipates that the gain from this settlement will bring its net per-share earnings to $3.39 for the fourth quarter and $8.27 for the year.

But the company's underlying results reflect weaker-than-anticipated conditions in North America as the housing slump cuts into demand for repair-related products. Black & Decker now expects a low-single-digit sales decrease for the fourth quarter, compared with its prior projection for "modest" organic sales growth.

Black & Decker also will record a $25 million pretax charge in the fourth quarter on the recall of its Dewalt XRP cordless drills. The company didn't detail the reason for the recall but said no injuries have been reported.