New Chief Is Changing Strategic Course, Analysts Say : Rockwell Plans to Sell Meter and Valve Unit

Rockwell International said Thursday that it plans to sell its Measurement & Flow Control division, a move that analysts said signals Rockwell Chairman Donald R. Beall’s first effort to set a new strategic course for the big conglomerate.

Analysts said the division, which produces meters and valves for utilities and industry, is likely to sell for more than $400 million.

“I suspect what is going on here is that the new chief executive officer (Beall), following in the very successful footsteps of Robert Anderson, is finding himself in a fix,” said Prudential-Bache aerospace analyst Paul Nisbet. “The company has had 12 years of consecutive record earnings. This year is going to be the top year for some time to come.”

Nisbet said he is projecting that Rockwell, based in El Segundo, will earn $3.05 a share in the year ending Sept. 30 but that profits in the next fiscal year will fall to $2.35 per share. By 1992, he predicted, earnings will have recovered only to $2.80 per share.

“That’s based on the status quo and a chugging-along economy,” he said. “Of course, the company’s automotive and factory automation businesses would suffer in a downturn.”

Among multi-industry firms, Rockwell has very high profit margins, which means that the company has little room to increase its earnings by improving its operating performance, Nisbet said.

To break out of that bleak scenario, Rockwell is positioning itself for a major acquisition, potentially worth up to $2 billion, Nisbet said. “The company is run awfully well, so there is no way to improve profitability in its current structure,” he said.

In a prepared statement, Beall said: “The sale of M&FC; will allow us to focus resources on our long-term strategic goal of positioning Rockwell for continued strengthening and growth in our larger core business--aerospace, automotive, electronics, graphics and industrial automation.”

Rockwell Senior Vice President Charles H. Harff said in an interview that the meter division is profitable, but declined to be more specific. “We think it is a very valuable property,” Harff said. “It is a business in which we have a leadership position.”

Nisbet said the operation is worth roughly $400 million to $425 million, based on a recent sale of a similar meter and valve operation by Singer. That sale, to a West German firm, fetched about 1.2 times revenues, he said.

The Rockwell unit is the largest U.S. manufacturer of residential water meters and has a significant market position in various industrial meters and valves. It employes 3,400 workers in manufacturing facilities in five states.

The operation was one of two publicly held industrial firms founded by Willard Rockwell, still referred to by company officials as “Col. Rockwell.” The two Rockwell operations were merged in 1973, combining their meter, automotive and general industries operations.

The aerospace business had been acquired in 1967, when Rockwell, then based in Pittsburgh, merged with North American Aircraft of El Segundo.