Teledyne Expands Engine Recall
Teledyne Technologies Inc., which was spun off from Allegheny Technologies Inc. in November, Wednesday widened a recall of small-aircraft engines to see whether crankshaft flaws it found were more widespread than it thought. Its stock tumbled 12%.
The Los Angeles-based company will take a second-quarter, $12-million pretax charge to cover the cost of inspections and replacing crankshafts. Teledyne makes engines and parts for the aerospace industry, as well as avionics and microwave components.
Teledyne broadened the recall to 3,000 engines from the 1,100 involved in April because it wants to inspect all crankshafts that might have been affected. The recall covers engines made from April 1998 to March 2000. Teledyne blamed the flaws on the quality of steel delivered by independent suppliers.
“It was a supplier-related issue. It doesn’t signal a problem with their manufacturing process,” said Steven Wortman, an analyst at Sidoti & Co., who reiterated his “buy” rating on the stock.
The planes that could be affected include older models of Textron Inc. Cessna planes, Raytheon Co. Beech aircraft and New Piper Aircraft Inc. planes.
The company said it’s taking legal action against some suppliers and seeking to recover its costs.
Teledyne shares fell $1.56, or 12%, to $11.50 on the New York Stock Exchange.
The company is expected to earn 38 cents a share in its second quarter, the average estimate of three analysts surveyed by First Call/Thomson Financial. In the year-ago second quarter, it had pro forma profit of $9.6 million, or 35 cents a share.
Wortman said he cut his second-quarter profit estimate to 37 cents from 39 cents to reflect the possible revenue shortfall in the engine division.
“In the short term, they may experience a small revenue shortfall as attention is focused on fixing existing engines instead of manufacturing new ones,” Wortman said.
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Teledyne Tumult
Teledyne Technologies’ stock has lost about half its value since March 28, when it closed at a 52-week high of $26 on a one-day spike. But its shares are up about 22% for the year. Weekly closes
and latest:
Wednesday: $11.50, down $1.56
Source: Bridge News
