- The Washington Times - Monday, July 10, 2006

Black & Decker Corp. is hoping its new cordless power tool will lift the company through the second quarter after a poor first quarter.

The Towson, Md., power tool maker released its DeWalt 36-volt lithium-ion cordless power tools last month.

Some analysts say the products, which last twice as long as the 18-volt version, is Black & Decker’s hope for a solid second quarter.

In April, Black & Decker reported that its first-quarter earnings fell 22 percent from the previous year to $113 million, though it beat the company’s and Wall Street’s expectations.

Black & Decker said it had a tough comparison to the year before, but also blamed high costs on materials, such as steel.

Sales had slowed to 0.6 percent growth during the quarter after 20 percent sales growth in years 2004 and 2005.

“Black & Decker has been on a roll the last couple years, but its momentum came to a screeching halt in the first quarter,” analyst B. Craig Hutson said last month.

“Despite a slow start to the year, BDK forecast midsingle-digit sales growth.

To reach this goal, it will need strong sales of its new DeWalt 36-volt lithium-ion power tools.”

Mr. Hutson, an analyst at bond research firm Gimme Credit LLC in New York City, has the company rated outperform.

“While we are excited about the prospects of [lithium-ion] technology to make traditionally corded professional products cordless we view it as a modest area of growth for BDK in the near term,” Prudential Equity Group LLC research analyst Nicholas Heymann said in a statement.

He has the company rated at hold.

Prudential does not have a banking relationship with Black & Decker, nor does Mr. Heymann own stock in the company.

Black & Decker is putting its stock in the cordless product, too.

At the first-quarter earnings announcement, the company bumped its year-end earnings forecast from $7.20 to 7.40 per share to $7.30 to $7.35.

“We remain confident that DeWalt’s 36-volt line of lithium-ion tools … will reinforce our cordless leadership position,” Black & Decker Chief Executive Officer Nolan D. Archibald said.

But Black & Decker’s stock has fallen nearly $13 since April.

Some investors have turned away from Black & Decker in fear that if or when new-home construction falls, as many economic analysts predict, the power tool company will suffer, analysts said.

Black & Decker said it is protected if new-home construction declines.

Chief Financial Officer Michael D. Mangan said in the first-quarter conference call that less than 20 percent of its sales are associated with U.S. new-home sales.

But higher construction costs are plaguing Black & Decker, too.

The company expects to spend $65 million — up from a previous estimate of $50 million — on material costs, such as copper, zinc, oil and steel, this year.

Black & Decker’s stock rose 52 cents yesterday to close at $80.98 on the New York Stock Exchange.

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