- The Washington Times - Monday, June 24, 2002

A series of moves by executives to stabilize earnings and an expected rebound in manufacturing may help Danaher Corp. emerge from the economic downturn in good financial shape despite a sliding stock price over the past month, recent analyst reports said.
Washington-based manufacturer Danaher, best known as the maker of Craftsman tools, has seen its stock price slide about 15 percent since a 52-week high of $75.33 on April 16. Shares rose 60 cents on Friday to close at $64.50.
But analysts cautioned against reading too much into the stock slide, blaming Danaher's woes on a slump in manufacturing that may end soon. While manufacturing has slipped in the past year, a Census Bureau report released last week said manufacturing shipments rose 2.2 percent from March to April.
"Danaher is weathering the economic storm," Merrill Lynch analyst Donna Takeda wrote in a research note released Friday. "It should emerge with an even stronger financial and competitive position than it enjoyed in the last cycle."
Ms. Takeda said Danaher has restructured its operations in the past year to make its earnings more stable and less related to cyclical changes in the economy.
Danaher officials were unavailable for comment yesterday, but earlier this month company Chief Executive Officer H. Lawrence Culp Jr. said he was comfortable with analysts' earnings estimates of 63 to 66 cents per share for the second quarter, and $2.65 to $2.75 for the year.
In the past 12 months Danaher has been an aggressive buyer of companies at a time when merger and acquisition activity has slowed to a crawl. Some investors are reported to have shied away from purchasing shares of the company, fearing that the acquisitions five since June last year were made to cover up weaknesses in other areas of the company. Ms. Takeda disputed that notion in her report.
"We understand some of you view the phrase 'serial acquirers' in much the same light as 'serial murderers,'" she wrote. "In Danaher's case, we think the pejorative is not warranted."
Standard and Poor's issued on Thursday an analysis of Danaher's credit rating and said the company should perform well through the economic downturn. S&P; gave Danaher an A-plus credit rating and said the company's aggressive growth strategy does not put that rating at risk.
"Danaher has the ability to pursue its aggressive growth strategy while maintaining a sound balance sheet," the S&P; report said.
Net earnings for Danaher in the first financial quarter ending March 29 were $82.7 million, or about 56 cents per share, nearly identical to earnings from the like quarter in 2001. The company will announce second-quarter earnings on July 18.
Meanwhile former Danaher Chief Executive Officer George Sherman has been named a possible candidate to head Tyco International Inc. Tyco CEO L. Dennis Kozlowki resigned earlier this month amid an investigation into tax evasion.
Mr. Sherman saw Danaher's sales increase from $750 million to $3.8 billion during his tenure from 1990 to May 2001.

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