Honeywell International Inc. HON, -0.01% said Tuesday it plans to spin off its Homes product portfolio and its ADI global distribution business, as well as its Transportation Systems business, into two separate publicly-traded companies. The spinoffs are expected to be completed by the end of 2018. The new Homes and Global Distribution business is expected to have annualized revenue of $4.5 billion, with 13,000 employees, while the new Transportation Systems business is expected to have revenue of $3 billion with 6,500 employees. "The remaining Honeywell portfolio will consist of high-growth businesses in six attractive industrial end markets, each aligned to global mega trends including energy efficiency, infrastructure investment, urbanization and safety," said Chief Executive Darius Adamczyk. Separately, Honeywell raised its 2017 earnings-per-share outlook to $7.05 to $7.10 from $7.00 to $7.10. For the third quarter, EPS is expected to be $1.75, above the FactSet consensus of $1.73, and revenue is expected to be up 3% to $10.1 billion, above expectations of $9.90 billion. The stock, which was inactive in premarket trade, has rallied 24% year to date, while the SPDR Industrial Select Sector ETF XLI, -0.28% has climbed 15% and the S&P 500 SPX, -0.18% has gained 14%.
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Conglomerate companies like Honeywell, UTC and others historically have commanded a lower earnings per share ratio than a similar sized company with a "pure" single business type. The rational for that is that stock purchasers would prefer to do their own diversification in pure company stock purchases than depend on a conglomerate to generate a better overall return on the investment. Or so it is taught. In this case, the smaller Honeywell is not expected to generate more earnings from a smaller operation, but it is expected that value of the three companies taken together will be equal to more than the Honeywell value prior to the announcement or rumors about it. For example, if current Honeywell value is $150 per share for everything, then the expectation is that new smaller Honeywell is worth, say $120 per share and the combined value of the other two companies is going to be greater than $30 per share almost solely on the basis of a higher EARNINGS PER SHARE ratio across the companies. In the end, it is also about future expectations and stock market magic. If revenue doesn't increase, then costs will continue to be cut increase earnings - QED RIFs etc will continue at new Honeywell and might continue at the spinoffs especially if Honeywell burdens them excessively with liabilities such as share of asbestos, pensions, etc.
How does the stock of a company that keeps shedding parts of itself continue to go up? Is this voodoo economics or a short squeeze? How do earnings go up when revenue, due to lost operations go down? Somebody explain it to me.
Honeywell 8 behaviors sound like Nazi propoganda. Work will set you free. Havent had a decent raise in 10yrs. 3 yrs no raise at all!!!
Spin off is a break or separation of a division from a company to make that a separate and independent entity. The weaker of the division is usually the spin off company. This was done so that HON can focus on their software Aero and other divisions growth etc and to pay off debts as well as make their investors happy.
What is really meant by 'spin-off'? Is that a sale?
MhGA
Growth comes from motivated and proud employees. How about that?!
They need to drain the swamp lol
Looking for input from both employees, insider thoughts and shareholders, with ideas to improve each Honeywell businesses organic grow to an acceptable level for both shareholders and employees mutual well being?
Where is the real organic growth coming from within Honeywell's businesses. It appears there is a lot of never met promises and results each quarter and a lot of misleading and happy talk in conference calls and no one from the top level managers to the lowest level managers seems to be held accountable for continual failure to produce real organic growth.
It appears Honeywell is more focused on creating monopolies within industries, never ending reduction-in-force actions, discriminating against older employees to reduce cost and pushing the more competent and responsible employees and managers out of the company to protect the current incompetent employees and managers at all levels. For years at all levels incompetent Honeywell manager and employees target the Honeywell competent employees managers by undermining the competent employees efforts, never ending back-staying tactics, bad performance reviews, false and untrue or unfounded accusations to HR to protect their own careers at Honeywell.
All you hear in management meetings are excuses for failure to met or exceed the real bottom line revenue, income organic growth. Who is asking the hard questions or challenging the lack of organic existing business growth and individuals being held accountable table for the short falls and endless excuses for all the under performing businesses. We never hear anything about actual business management and leadership changes to correct the lack of organic growth or management changes to use as an example for now producing organic growth. It seems all the attention is diverted to growth via never ending acquisition with little to no attention to how the existing businesses are being managed and developed for future growth.
Where are the major new game changing products and services to produce sustainable revenue streams growth associated with new efforts of existing businesses. I've heard many businesses and growth efforts touted for years to no avail. HBT and Fluorine Products seem to only replace existing product sales and technology by catabolizing their existing businesses and touting it as growth, when its actual not growth but product catabolization of their existing products.
It appears senior management is minding the store or asking the hard questions of each and every employee and holding people accountable who have failed for years to produce real organic growth in terms of income and revenue. Who are the managers of Homes, ADI and Transportation that destroyed their business and failed to create real organic growth over the last five years are they still at Honeywell. Have they been promoted to other Honeywell businesses to continue their mismanagement, destruction and take credit for the efforts and hard work of the real Organic Growth managers taking all the risk to grow the businesses?