EVERETT – Intermec Inc. plans to cut costs and restructure in the coming months after sales of the company’s computing and inventory scanning devices and services slipped in the third quarter.
Whether the cost-cutting moves will mean layoffs at Intermec’s headquarters in Everett still is up in the air. Larry Brady, Intermec’s chairman and chief executive, said details of the restructuring will be announced in about three weeks. The goal will be to save $20 million or more annually.
The company’s earnings during the third quarter totaled $3.4 million, or 5 cents per share, compared to $11.3 million in the year-ago quarter.
The results announced Wednesday included a one-time, $1.8 million charge related to Intermec’s closure of two design centers in Sweden. On the other hand, the company saved $2.1 million from company pension and benefit policy changes that effectively froze benefit accruals for most participating employees as of June 30.
Overall revenue fell by 11 percent during the quarter, from about $220 million at this time last year to just under $196 million. Sales declined by 14 percent in North America and 17 percent in Europe, the Middle East and Africa. In Asia and Latin America, however, they increased 19 percent.
The quarter’s revenue was in line with revised estimates Intermec issued last month. Originally, the company hoped to make more than $230 million for the period.
Intermec’s core products – rugged, mobile computers, bar-code scanners and other inventory tracking technology – brought in 20 percent less revenue than a year ago.
Brady blamed increased competition and timing issues related to the company’s new products for much of the decline.
“It currently does not appear that broader business conditions are much of a factor,” he said.
Intermec’s primary competitor, Symbol Technologies, was acquired by Motorola during the third quarter.
“It’s impossible not to be impressed with the formidable force that combination generates,” he said. But Intermec knows how to compete against the new rival, he said.
As far as potential takeover rumors surrounding Intermec, Brady said he plans to go forward with Intermec as an independent company. Still, it needs to streamline itself for the long term.
“There are lots of opportunities to improve productivity,” he said.
A new restructuring of the company would come on the heels of a previous reinvention over the past three years. During that period, the company moved its corporate headquarters from California to Everett and sold off its industrial-related businesses to focus on technology products. The moves helped restore Intermec to profitability.
Before major cost-cutting moves are made, however, the company plans more immediate actions in the fourth quarter, including cutting its inventory of products by $20 million to $25 million, Brady said.
The company also plans to move ahead with repurchasing shares of its stock, Brady said. During the third quarter, Intermec bought back about $50 million worth of stock. The board of directors has authorized buying back up to $50 million more. Brady said the firm ended the third quarter with nearly $238 million in reserve cash and investments.
Before Intermec announced its quarterly financial results Wednesday, its shares closed down 28 cents at $22.32. They were up slightly in after-hours trading.
One of the largest companies based in Snohomish County, Intermec employs about 2,600 people worldwide and has a market value of $1.4 billion.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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