Fluor Shares Drop 13% After Layoffs Report

Fluor Corp.’s stock tumbled below $30 a share Wednesday for the first time in more than eight years, after the Irvine construction and engineering giant announced a sweeping restructuring that will include 5,000 layoffs.

The company’s shares slumped to $29.75 at one point during the session before rallying a bit to close at $30, down $4.31, or 13%. The stock last traded below $30 on Oct. 17, 1990, when it hit $29.50 a share.

Trading was heavy Wednesday on the New York Stock Exchange. A total of 2 million shares changed hands, more than four times the daily average over the last three months.

In announcing the layoffs Tuesday as part of a major restructuring, Fluor said its business is slowing. It also said it will take a charge of $93 million in the fiscal second quarter and close 15 offices as it tries to overcome soaring overhead and weak profit margins in a struggling global economy. The charge will equal $1.23 a share and result in a loss in the quarter ending April 19, officials said.

The announcement prompted Goldman, Sachs & Co. analyst Chris Hussey to lower the stock rating to “market perform” from “market outperform.” His downgrade stems in part from the company’s disclosure that it expects engineering and construction orders to fall this year to about $6 billion from $10 billion last year.

“The end market demand for construction services continues to get more difficult,” Hussey said.

He cut his fiscal 1999 estimates to $2.65 a share from $2.95, and his 2000 estimate to $2.40 from $3.

Fluor will break the company into four business groups and will make the job cuts by the end of 1999.

The charge will trim fiscal 1999 profit to $107 million, or $1.42, from $235.3 million, or $2.97, in 1998, the company said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Fluor Falling

Fluor Corp.’s stock continues to slide in the wake of the company’s announcement that it plans to eliminate 5,000 jobs. After closing at $34.31 Tuesday, the price sank in Wednesday trading to close at $30--a 13% decline. Fluor last closed below $30 in October, 1990.

Tuesday close: $34.31

Wednesday hourly closings

9:30-10:30 a.m.: $32.75

10:30-11:30: $31.50

11:30 a.m.-12:30 p.m.: $31.69

12:30-1:30: $31.06

1:30-2:30: $30.19

2:30-3:30: $30.19

3:30-4:30: $30.00

Wednesday close: $30.00

Source: Bloomberg News