‘Chainsaw Al’ to Detail Restructuring
Just when many Americans are thinking about breaking out their Coleman stoves and lanterns for another camping season, new parent Sunbeam Co. may be ready to take a chainsaw to company operations.
Sunbeam Chairman “Chainsaw” Al Dunlap today intends to announce plans for putting his own stamp on recently purchased Coleman of Wichita, Kan.; Signature Brands USA Inc., the Glenwillow, Ohio-based makers of Mr. Coffee products; and First Alert Inc. of Aurora, Ill.
“Is the restructuring of these companies going to go as far as the restructuring at Sunbeam?” said analyst R. Scott Graham of CIBC Oppenheimer. “It better not.”
Judging by Dunlap’s track record--cutting half of Sunbeam’s 12,000 employees along with most factories and products--the reorganization could radically change the face of the companies. But analysts suspect recent events may have tempered Dunlap’s slice-and-dice approach.
“I think he’s got to take a little different tack this time around,” said Justin Maurer of McDonald & Co. He expects cuts to be “meaningful but not too aggressive.”
No one was expecting the severity of cuts that reshaped the home-appliance maker after Dunlap arrived less than two years ago. The three target companies have been producing weak profits with 9,100 employees, but they’re not considered as bloated as the old Sunbeam.
“This is not a company that buys companies that are wildly profitable,” said Graham. “They’re very good at turning them around.”
The purchased companies’ headquarters are likely to disappear as Sunbeam moves from Delray Beach, Fla., to a Boca Raton office three times bigger. The most likely target areas for job cuts are the companies’ duplicative personnel, legal, accounting, MIS and purchasing departments.
As Dunlap announces his new corporate outlook, he’ll also give the details of a first-quarter loss on lower sales, the first negatives since he deemed the Sunbeam restructuring complete.
Since Dunlap took over, Sunbeam stock climbed to $53, but a warning about the bad quarterly news and a pair of shareholder lawsuits helped push the price below $26.
Analysts are a little leery right now because they issued stock recommendations based on Dunlap’s over-optimistic projection of 20% sales growth. And after hearing him emphasize the value of paying executives and directors in stock, his non-stock compensation more than doubled to $1.4 million last year.
If Sunbeam combines its $1.17 billion in sales with Coleman, Signature Brands and First Alert, the combined companies’ sales base will be $2.7 billion.
