Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, November 15, 1995 TAG: 9511150056
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
SOURCE: Bloomberg Business News
DATELINE: ST. PAUL, MINN. LENGTH: Medium
3M, also known as Minnesota Mining & Manufacturing, said the moves will cause a $600 million pretax charge in the fourth quarter and the elimination of 5,000 jobs in the next 12 months.
It's the largest restructuring in the company's history and a surprising move at an outfit known for patiently nurturing its businesses through difficult times.
``It's out of character for them to do something this bold,'' said Richard Sporrer, a Parker/Hunter analyst. ``This is a long-term positive for the company and the shareholders.''
The businesses 3M is leaving had revenue last year of about $2.65 billion. The company will retain operations with more than $12 billion in revenue. St. Paul, Minn.-based 3M makes some 66,000 products, ranging from Post-It notes to Scotch tape to surgical supplies.
Many of the products remaining rely on technology ``in which we hold a competitive advantage,'' said 3M Chairman L.D. DeSimone.
The businesses to be spun off or discontinued are part of the company's troubled information, imaging and electronics unit, which has been a drag on earnings for almost six years. It makes products such as computer diskettes and backup tapes as well as imaging products such as X-ray film.
Last year, the unit eked out an operating profit of just 6.5 percent of sales, due largely to intense price competition. That compares with a robust 21 percent for 3M's medical and safety products and 17 percent for its consumer and industrial products.
3M's audio and videotape business, which had $650 million in sales last year, also has been hit with falling prices and rising raw material costs, squeezing margins.
by CNB