Cooper Shares Drop 11% After Profit Estimate

Cooper Industries Inc. shares fell about 11% after the maker of Champion spark plugs and other auto parts said second-quarter earnings will fall below expectations, partly because of work stoppages at General Motors Corp. plants.

Cooper said its per-share earnings will be “up modestly” from the 86 cents it earned in the year-ago quarter, but below the 93 cents analysts estimated, according to IBES International Inc.

Houston-based Cooper said earnings also will be hurt by a slowdown of orders for its power equipment and electrical construction materials from Southeast Asia, and greater competition in domestic markets as utilities and large industrial customers pare inventories and reduce capital spending.

Cost-cutting programs will be stepped up in case the conditions persist, Cooper said.

“There will always be bumps in the road, and we will see how we maneuver this set of bumps,” said H. John Riley Jr., Cooper president and chief executive. “I’m confident we’ll be able to say we managed a very difficult situation in the worldwide economies as well as anybody.”

The GM strike, on top of an already weak auto parts market, will cost Cooper about $1 million a month in lost sales, said John Breed, a Cooper spokesman. Auto parts sales of $1.9 billion accounted for 36% of Cooper’s 1997 revenue of $5.3 billion.

Cooper said in April it would consider spinning off or selling its auto parts business, or making it a separately traded company through an initial public offering, to focus on its more profitable electrical products and hardware units.

The electrical division accounts for about half of Cooper’s sales. The company said it expects higher second-quarter revenue from its fuses, lighting fixtures and hand and power tools.

Cooper dropped $7.25 to close at $56 on the New York Stock Exchange.