WMX Technologies Inc. said Tuesday it would slash 3,000 jobs over the next three years and get rid of about $1.5 billion in operations outside its main trash-hauling business.
But shareholders, some of whom had demanded sweeping changes in the firm, were not impressed with the planned make-over.
WMX stock tumbled 3.12-1/2, or 8.7 percent, to $33 a share in some of the most active trading on the New York Stock Exchange.
Some major shareholders said the plans to sell off businesses unrelated to trash and toxic-waste hauling do not go far enough. Others contended the price WMX expects to get for the businesses is too high.
“They already sold $1 billion in assets last year and got nowhere near $1 billion in return,” said analyst James Kelleher at Argus Research. “Anybody looking to buy assets, knowing (WMX’s) shareholders are holding management’s feet to the fire, are going to hold out to get the stuff on the cheap.”
WMX stock soared last week to a 52-week high on expectations the company would announce major changes. Shareholders’ displeasure has grown in recent months over the company’s forays into engineering, consulting and other non-garbage businesses.
The changes announced Tuesday illustrate the power a company’s major shareholders can have on that firm’s decisionmaking, analysts say.
The company, based in the Chicago suburb of Oak Brook, said it took a $680 million charge in the fourth quarter to begin the restructuring, which includes eliminating 1,200 jobs this year through layoffs and attrition.
“The company has an unmatched franchise,” WMX Chief Executive Phillip B. Rooney said in a statement.
“We will concentrate on improving our operations, training and developing our people and, by offering customers the best quality service in our industry, generating improved results,” he said.
One of the more significant changes the company announced was the reassignment of Chief Financial Officer James E. Koenig. Major institutional shareholders had sought his removal from the post because of the company’s stagnant performance.
Koenig was named president of Waste Management Shared Services, a new position giving him responsibility for administrative support. John D. Sanford, vice president and chief financial officer for the Wheelabrator Technologies subsidiary, was named chief financial officer of Waste Management.
Stanley Druckenmiller, managing director of Soros Fund Management, had called in December for Koenig’s ouster. The Soros Fund holds a 4.6 percent stake in WMX and has been unhappy with the company’s languishing stock price, as has Lens Inc., with a $17 million stake in the company.
WMX also announced it would accelerate its share repurchase program with a $1 billion Dutch auction tender offer in the second quarter of this year.
WMX also wants to go back to its former name, Waste Management Inc., which it operated under until 1993. The proposal will be submitted to shareholders at its May 9 annual meeting.
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