Honeywell International Inc will consolidate operations into four units, as Chief Executive Lawrence Bossidy moves to reduce costs after General Electric Co's planned purchase of the company collapsed.
Chief Operating Officer Giannantonio Ferrari will retire immediately, spokesman Tom Crane said. Estimates weren't available of what savings will come from combining the eight divisions into aerospace, automation and controls, specialty materials, and transportation and power units, Crane said.
Bossidy returned from retirement after European regulators blocked the US$47 billion purchase, replacing Michael Bonsignore. He was given a year by Honeywell's board to fix operations. Honeywell cut profit forecasts last week for the fourth time in a year as the slowing economy cut sales. Bossidy may decide to sell the company as a whole or in parts, some analysts said.
"Breaking it up into many different parts significantly reduces the regulatory scrutiny and ensures the broadest number of buyers for assets that would have higher value" said Nick Heymann, an analyst at Prudential Securities Inc, who has a "hold" rating on Honeywell.
The stock of the Morris Township, New Jersey-based company has dropped 23 percent this year.
The number of division man-agers who report directly to Bossidy will drop to four from eight. Ferrari, 61, was a 40-year Honeywell veteran, Crane said. A replacement wasn't named.
"Larry Bossidy is wasting no time," said Phua Young, an analyst at Merrill Lynch & Co, who has a "near-term buy" on Honeywell. "These management changes emphasize the game plan to quickly replace the laid-back culture of the former Honeywell." Bossidy was Chief Executive of Allied Signal Inc when the company purchased Honeywell Inc in December 1999 and assumed the Honeywell name. Bonsignore, who ran the old Honeywell, was tapped as Bossidy's successor at the time.
Honeywell had agreed to be acquired by United Technologies Corp before spurning that offer after General Electric made its unsolicited proposal in October. European regulators blocked the General Electric's planned transaction on concern it would limit competition in the aerospace industry.
Bossidy has said he's not interested right now in another buyer. Analysts have speculated that United Technologies CEO George David may make an offer.
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