October 17, 2012 / 6:43 PM / 6 years ago

UPDATE 2-Dover cuts FY forecast on weakness in handsets, electronics

* Third-quarter earnings $1.32 per share vs est $1.28 per share

* Third-quarter revenue $2.21 bln vs est $2.25 bln

* Sees FY12 earnings from cont ops at $4.55 to $4.65 per share

* Sees FY12 revenue growth of 7 pct, down from 8-10 pct prior view

By Tej Sapru

Oct 17 (Reuters) - U.S. industrial conglomerate Dover Corp reported lower-than-expected revenue for the third quarter due to weakness in its handset and electronics businesses, and cut its full-year forecast for the second time this year.

The weakness in the handset business, which contributes about 7 percent of Dover’s total revenue, is a result of the company’s acquisition of Sound Solutions, a maker of speakers and receivers for cell phones with a heavy dependence on Nokia Oyj.

Sound Solutions had annual revenue of about $330 million in 2010, a year before it was acquired by the conglomerate.

For the third quarter, Dover reported total sales of $2.21 billion, missing analysts’ average estimate of $2.25 billion.

“The challenges at Sound Solutions ... along with normal seasonality in the handset market will continue to impact results through year-end,” Dover CEO Bob Livingston said on a conference call after the results were announced.

Dover has been taking steps to reduce the unit’s exposure to the struggling mobile phone maker that is losing market share to Apple and Samsung.

Nokia’s share of Sound Solutions’ business has fallen to 25-30 percent from 50 percent at the beginning of the year, Dover officials said on the call. Sound Solutions will break even in the fourth quarter and be profitable starting from 2013, they added.

Dover lowered its growth projection for the full year to account for the year-end weakness.

The company, valued at over $10 billion, said it now expects revenue growth to be about 7 percent this year and not 8 to 10 percent as forecast earlier.

Dover, whose businesses range from industrial pumps to food packaging equipment and microphones for consumer electronics, also lowered its per-share earnings forecast for continuing operations to $4.55-$4.65 from $4.70-$4.85.

It earned $1.32 per share during the third quarter, above analysts’ expectations of $1.28.


Dover said revenue at its printing and identification business, which accounted for 16 percent of the total, was down by more than a tenth.

Analysts believe that unlike the handset and Sound Solutions businesses, Dover will not be able to improve the segment’s performance.

“With the electronics market, it is a demand issue, not an execution issue,” Stifel Nicolaus analyst Nathan Jones said.

The segment has been hit by soft demand for consumer electronics in general and a weakness in the export market out of China, Jones said.

Dover’s CEO Livingston too said he did not see a near term recovery in the electronics market.

Shares of Downers Grove, Illinois-based Dover fell 2 percent to $55.85 on Wednesday on the New York Stock Exchange.

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