Textron Inc., the maker of Bell helicopters and Cessna aircraft, dropped the most in seven years in New York trading after saying it plans to exit most of its finance businesses and that profit this quarter will trail forecasts, dpa reported.
Textron, based in Providence, Rhode Island, declined $3.12, or 20 percent, to $12.22 at 1:23 p.m. in New York Stock Exchange composite trading. Earlier, the shares fell to $12.01 in the biggest intraday percentage loss since Sept. 26, 2001.
Profit this quarter will be hurt by losses at Textron Financial Corp., the company said in a statement released after U.S. markets closed yesterday. Textron plans to sell or liquidate $7.9 billion of the unit's $11.4 billion in managed receivables, more than the $2 billion previously targeted. It will retain its finance unit that serves its manufacturing units.
"Given the state of the credit markets and the government's intervention on behalf of tier one commercial paper issuers, the Textron Financial business model is broken," Brian Betts, an analyst with Gabelli & Co. in Rye, New York, wrote in a note today. He recommends buying the stock. "This is a painful but necessary step for Textron."
Fourth-quarter profit from continuing operations excluding certain items will be 30 cents and 40 cents a share, compared with a previous estimate of 80 cents to 90 cents, the company said. The average estimate of 11 analysts surveyed by Bloomberg was for 78 cents. Textron now expects a net loss of 81 cents to 91 cents.