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Optical networking company Corning (NYSE: GLW) announced fiscal third-quarter results this morning with profits more than doubling. The company cited increased demand for optical fiber and components used in communication networks. Corning reported pro forma earnings of $317 million, or $0.35 per share, compared to $148.1 million, or $0.17 per share, in the year-ago period. The announcement was in line with the company's recently raised forecast of $0.34 to $0.35 per share, with the Street consensus calling for $0.34 per share. Revenues came in at $1.9 billion, a 54% increase from the year-ago figure of $1.25 billion.
Under terms of the agreement, General Electric will pay 1.055 shares for the automated controls maker, or about $55.12 per share based on Friday's close. The equity and debt mix is about $45 billion and $3.4 billion, respectively. According to General Electric, the deal will add at least $0.10 per share in its first full year and is being accounted for as a pooling of interest.
After planning to step down as chairman in April, it's a bonus Welch will be staying on to supervise the transition, calming Street concerns. He's been on the job for over two decades, overseeing tremendous company success, and is considered a top-notch corporate executive. The company still plans on going through with earlier plans to name a successor, expected sometime before the year's end.
The announcement comes only days after aerospace parts company United Technologies (NYSE: UTX) and Honeywell were in similar talks for a deal reportedly worth $40 billion. It would have created an aerospace parts company with over $48 billion in annual sales based on last fiscal year's figures. According to reports, United Technologies stepped away from the table, unwilling to engage in a bidding war after learning General Electric had entered the picture.
Likewise, this deal comes less than a year after AlligedSignal bought Honeywell and became Honeywell International. Of course, integration is always a concern with any acquisition, and this one will have its fair share of changes, with surely more to come. According to a Honeywell spokesperson, its headquarters in Morristown, N.J. will be closed and about 500 employees will potentially lose their jobs. Three Honeywell officials will be added to GE's board, including CEO Michael Bonsignore.
Overall, the acquisition creates an industrial Goliath that specializes in aerospace, chemicals, and plastics products and systems, among others. According to Welch, Honeywell's core businesses -- avionics, automated controls, performance materials, and microturbine technology -- are a perfect fit with four of General Electric's major business lines.
Over the weekend, Lucent Technologies' (NYSE: LU) board of directors named Henry Schacht the company's new chairman and CEO. According to a press release, a need for a new set of skills at this point in the company's life was the reason for replacing existing Chairman and CEO Richard McGinn. Schacht is returning to a position he held from 1995 to 1997. He will work with senior management to run day-to-day operations and will begin a search for his successor. The change could not come at a better time, as Bill Mann recently commented. After yet another earnings warning earlier this month, Lucent shareholders were calling for the McGinn's removal. Hooray for them, I suppose.
According to The Wall Street Journal, AT&T (NYSE: T) is contemplating a plan, "Project Grand Slam", that would split the company into four businesses: consumer long distance, wireless, business, and broadband. The Business Services division, its largest and most profitable, would become the new AT&T. It would create brand and licensing arrangements with the three other businesses. That division generated 39% of the company's total 1999 revenue, or $25 billion. The proposal will be discussed at the telecommunication provider's board meeting Monday and, if approved, could be announced as soon as Wednesday.
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