Dunlap Blends Layoffs, Closures Into Sunbeam Recipe

Sunbeam Corp. Chief Executive Albert Dunlap will unveil his long-awaited cost-cutting plan Tuesday, complete with the massive firings and plant closings that befit his reputation.

The plan, though, could surprise people with something the cost-cutting crusader isn’t as known for: initiatives designed to boost sales and propel the small-appliance maker out of its profit nosedive, analysts and investors said.

“This is not rocket science - it’s toaster ovens and lawn furniture,” said Gerry Sandel, a portfolio manager with M&I Management, which holds more than 100,000 shares. “It’s a matter of taking a good franchise and good brand names and maximizing their business potential.”

Dunlap, known for lightning quick corporate turnarounds, took the job at Fort Lauderdale, Fla.-based Sunbeam in July and promised a restructuring plan would be in place by year-end. He hired consultant Coopers & Lybrand LLP for a top-to-bottom review of the company’s operations.

Investors expect big things from Dunlap and Sunbeam, which has failed to meet profit expectations in nearly every quarter for two years. Sunbeam’s share price has doubled to $25.87 from $12.25 since he started.

On the cost side of Dunlap’s plan, at least 30 percent of Sunbeam’s 12,000 workers could lose their jobs, analysts said. The number could rise as Dunlap closes about 30 of the company’s 42 far-flung factories, analysts said.

While Sunbeam declined to comment in advance of Tuesday’s announcement, Dunlap said a month ago that most of Sunbeam’s plants are antiquated.

“When the prior management built world-class facilities, they didn’t close the old ones,” he said.

The one sure to escape is a state-of-the-art plant that recently opened in Hattiesburg, Miss. That factory is underused and will absorb most of the production from the closed plants, he said.

Some of the cuts have started. Dunlap fired nearly all of the executives left behind when former Chairman and Chief Executive Roger Schipke was pressured to resign last May. The new management team includes many of the same faces who have worked with Dunlap in past restructurings.

Some of the stocks that moved substantially or traded heavily Friday:

NYSE

America Online, up $1 to $25.

Although the computer online service reported a hefty quarterly loss late Thursday, that was due to a one-time writeoff for marketing expenses and revenues were up 77 percent.

Conrail, up $3.37-1/2 to $96.37-1/2.

Norfolk Southern raised its hostile takeover bid for the railroad to $110 a share in cash. CSX Corp.’s friendly bid is also $110, but only for 40 percent of Conrail. The rest is in CSX stock, which makes the offer less valuable than Norfolk’s.

Iomega, down $1 to $24.37-1/2.

The Roy, Utah-based maker of computer disk drives debuted on the NYSE, having switched from the Nasdaq. It was the most active issue at 13 million shares as of 4 p.m.

NASDAQ

Advanced Tissue Sciences, down $3.75 to $10.87-1/2.

The La Jolla, Calif. biotech company was downgraded from strong buy to neutral by Morgan Stanley, which expressed concerns about the validity of a study showing the company’s skin replacement product, Dermagraft, worked well in treating diabetic foot ulcers.

Intuit, up $2.87-1/2 to $36.50.

Scott Cook, chairman of the Menlo Park, Calif. financial software company made remarks that put a damper on rumors that it might be taken over by American Express Corp. Intuit now works with a number of banks and financial institutions and Cook said any attempt by one institution to use Intuit to promote its services exclusively would be counterproductive.