Gloom spreads among US firms

Stock market traders deal on companies' warnings

Three leading US firms in the computer, telecom and office equipment sectors have issued warnings about their future earnings.

The Post-it notes maker 3M expects its fourth quarter results to be weak

The number two US computer printer maker, Lexmark International, almost halved its profit forecast for the last three months of the year as it announced up to 1,600 job cuts.

The second ranking US local telephone company SBC Communications, announcing it was axing "several thousand jobs", said it expected the economic downturn in the US to last well into next year.

While the software-to-sticky tape conglomerate 3M, or Minnesota Mining & Manufacturing, warned that its earnings will come in at the low end of analysts' expectations.

3M announced 5,000 job cuts in April.

Uncertain outlook

Stock market traders in the US were rattled by the companies' gloomy outlook.

SBC's net income fell 31% during the third quarter to about $2bn, sending its share down $1.27 to $42.37.

3M's income fell 21% to $394m while Lexmark's profits were, at $70m, 6-7% higher than last year's.

The companies blamed the slowing US economy and tough competition for their falling earnings.

Lexmark

Lexmark's decision to slash its work force by 12% will affect most the company's Mexican factory in Reynosa and headquarters in Kentucky, the company said.

"These difficult steps are necessary to intensify our focus on being the low-cost producer in the industry," chairman and chief executive Paul Curlander said.

The cuts should pay off as the restructuring creates savings of $50-60m, Lexmark said.

SBC

SBC said stiff competition and the economic weakness would put "significant pressure on [its] ability to create meaningful growth in 2002".

The firm said it would cut capital spending by 20% next year to minimise the affects of the slump.

The cutbacks will involve the scaling back of the development of a high-speed internet access network.

3M

3M, whose products include Scotch tape and Post-it notes, suffered falling sales both in the US and internationally.

The strong US dollar slashed 2.7% off its third quarter sales, the company estimated.

"Although the economic outlook remains uncertain, we are focused on making the fundamental changes necessary to improve our competitive advantage," chief executive James McNerney said.