NEWS AND COMMENTARY
September 19, 2000
Gillette Stock Shaved 7% to Yearly Low
By The Associated Press
Weak Euro, High Oil Prices Threaten Earnings and Much More ... Weiss comments
NEW YORK - Gillette stock fell to a 52-week low yesterday after reporting that third-quarter sales would be unchanged from a year before, due in part to the continued drop in value of the European common currency, Euro.
Shares of Gillette fell 7.3%, or $2.19, to $27.63.
Gillette said sales will be virtually unchanged compared to the third quarter in 1999, when the company reported sales of $2.51 billion. However, earnings per share will be slightly ahead of a year ago, the company said.
Analysts surveyed by First Call/Thomson Financial estimate Gillette earnings at 34 cents a share for the third quarter, compared with earnings of 32 cents a share in the third quarter of 1999.
The company said it expected the currency slump to drag down sales about 6% in the third quarter. Gillette also said it has been hurt by lower-than-expected sales in its Duracell battery line, and blamed increased competition.
Gillette said it "remains comfortable" with current Wall Street estimates for the fourth quarter, pegged at 36 cents a share, up from 32 cents in the year-earlier quarter.
The stock market had been trying to shrug off high oil prices, but companies are warning that oil prices have indeed wrecked havoc on their bottom line. In addition, a weak euro makes U.S. exports more expensive, hurting sales abroad.
Companies, from blue chip to technology, have issued warnings to Wall Street to lower its expectations for the third quarter earnings season. The Dow dropped 108 points yesterday and is on its way down again today. The Nasdaq, though gaining slightly today, dropped 118 points yesterday and shows no signs of being able to sustain today's upward trend.
With oil prices continuing to rocket skyward and the euro reaching new lows every day, the economic picture for the fourth quarter doesn't look any better.
The market's fall in certain sectors has been so precipitous that many investors have lost all the great gains they've made in the last few years. Very soon, these guys and gals might throw their hands up in disgust and walk away from the table.
If that happens, the recent fall in the Dow and Nasdaq will look like a bump compared to the plunge that will happen next. Such a fall would wipe out trillions in assets in the blink of an eye. That is the shadow of fear that hangs over every investor on the street today.