Analysts paint grim picture for Maytag’s future

Analysts paint grim picture for Maytag’s future
 
Date April 26, 2005
Section(s) Local News
Brief  
 
NEWTON (AP) — Analysts were questioning the viability of Maytag Corp. as the appliance maker’s stock opened Tuesday at its lowest level in more than a decade.

Maytag stock plunged 84 cents Monday to close at $10.05, a drop of 7.7 percent. The stock also fell on Friday after the company reported lower first-quarter sales and earnings. In early trading today, the stock dipped to $9.70 before climbing to $10.10 at 10 a.m.

Laura Champine, an analyst with Morgan Keegan & Co., said the outlook for Maytag‘s plant in Newton is shaky.

“Newton is getting a little toasty,” she said. “I truly think it’s going to shrink or close. I don’t think the (Newton plant) will be a year from now what it is today.”

The plant employs 1,275 people.

Maytag has a large debt and faces increasing competition from foreign companies that have lower costs and domestic companies that operate in lower-cost countries.

Nicholas Heymann, an analyst for Prudential Equity Group, said Maytag‘s “prospects for long-term viability remain extremely dire.”

The comment was included in a research note Monday to investors.

“It’s not hard to imagine that Maytag could be required to enter bankruptcy,” he said.

Karen Lynn, a company spokeswoman, said Maytag is still profitable.

“Although our sales were down, our (first-quarter) market share was up from the fourth quarter,” she said. “This shows that consumers believe in and are buying our products and our brands.”

She said Maytag has received financing from banks from multiyear credit and has a plan to address costs.

Maytag Chairman Ralph Hake said after Friday’s announcement that the company is planning to reorganize its manufacturing operations and that the Newton plant is in jeopardy.

David McGregor, an analyst for Ohio-based Longbow Research, also had a grim assessment of Maytag.

“We believe it may be too late to salvage this company as an independent player in the major appliance business,” he wrote.

McGregor said Maytag‘s assets could be attractive to other companies, particularly foreign appliance manufacturers.

Maytag markets appliances under the Jenn-Air, Amana and Magic Chef brands. It also manufactures Hoover brand floor care products.

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