Just days after pushing for TRW Inc. to shed its automobile parts business, chairman and chief executive David M. Cote abruptly resigned Tuesday to take over the top position at aerospace rival Honeywell International Inc.
The stunning move shocked investors, who led a late sell-off of TRW shares. They fell $3.29 cents, or 7%, to close at $41.75 on the New York Stock Exchange. TRW announced the resignation about an hour before the close.
But aerospace analyst Paul H. Nisbet of JSA Research Inc. said investors were overreacting to a personnel move that has no underlying reason other than Cote getting a better job.
"I didn't leave TRW without some angst," Cote told analysts. "I really enjoyed the company. I liked the businesses we were in. But at the end of the day, the opportunity to run Honeywell was too big to pass up."
Honeywell, a Morristown, N.J., maker of aircraft components and power generators, has been looking for a chairman and chief executive to replace Lawrence Bossidy, who returned to the company on an interim basis last summer after it failed to get European approval to merge with General Electric Co.
Both Bossidy, 66, and Cote, 49, are former GE executives, and Cote was once considered a potential successor to GE's longtime and now-retired chairman, Jack Welch.
In Cote, Honeywell will get a chief executive who has two years of experience running a company with similar lines of business.
Still, the resignation appears to have caught TRW off guard as its directors assured analysts that there were no financial problems and that the company was still on track to meet its earnings projections for the year.
Wall Street has been leery of any sudden changes in management since the Enron Corp. scandal erupted after the resignation of one of its top executives last fall.
The move also came days after the Wall Street Journal reported that Cote was pushing to have TRW divest its automotive business and concentrate on aerospace and defense-related operations. TRW generates about two-thirds of its revenue from the automobile business, but earnings have been dropping while prospects for aerospace earnings have climbed with the possibility of a major defense buildup. The sudden resignation fueled speculation that Cote left after a disagreement with the board over the firm's direction.
There was more intrigue Tuesday as a former TRW executive who was scheduled to speak at a defense industry conference in Washington did not appear. That executive, Philip A. Odeen, was later named to head a three-person chief executive office.