Poor Film Sales Cause Lower-Than-Expected Profits For Polaroid
BOSTON (AP) _ Polaroid Corp. on Tuesday forecast no profit growth for the final quarter of 1994 due to less than expected sales and high development costs.
The news surprised Wall Street analysts. Polaroid stock dropped 9 percent, closing down $3 at $29.87 1/2 on the New York Stock Exchange.
Brenda Lee Landry, an analyst with Morgan Stanley & Co., called the forecast a ``debacle″ after the photography company performed well in the third quarter.
Polaroid won’t release its fourth quarter earnings until Jan. 31. But it said it anticipates operating profits to be the same as the year-ago period, when they were $77.3 million. The company’s third quarter-profit was $52.7 million, 28 percent higher than in 1993.
``This is a far cry from what was anticipated,″ said Eugene Glazer, an analyst with Dean Witter Reynolds Inc. In the third quarter, he said, ``it looked like the earnings were beginning to turn around, and now you’re seeing that momentum stop.″
But Glazer added that the anticipated poor results would be offset slightly by a lower-than-expected tax rate.
Polaroid’s announcement was unexpected because the company usually experiences a sales boost at the end of the year, when people stock up on camera equipment and film during the holidays.
Polaroid distributes to retailers in the United States, Western Europe and Russia.
``Our Russian sales were not as high as we expected, and in the final weeks of the year in the U.S., we didn’t sell as much film as we had planned,″ said company spokesman Robert Guenther.
Profiability was also affected by investments last year in new product development, such as a line of digital imaging equipment for graphic artists, Guenther said. In addition, the company further developed its line photographic equipment used in hospital radiology departments.
In a statement, I. MacAllister Booth, Polaroid president and chief executive officer, said the company was ``actively reviewing a range of possible action steps for enhancing profitability in 1995.″
Guenther said the company had not yet determined what those steps might be. He would not say whether there was a possibility of layoffs.
Analysts said they could not anticipate what measures the company would undertake to cut costs. Polaroid is expected to announce some of its plans in a meeting with Wall Street analysts Feb. 3.