Shares of Maytag Corp. (MYG.N: Quote, Profile, Research) , which touched a 14-year-low on Friday after it reported lower quarterly profit and slashed its outlook, fell another 5 percent on Monday as some analysts raised more doubts about the appliance maker’s long-term prospects.
“We believe it may be too late to salvage this company as an independent player in the major appliance business,” Longbow Research analyst David MacGregor said in a research note.
In MacGregor’s opinion, the company’s Maytag and Hoover brands could be valuable assets to a potential acquirer. He also said he expected Maytag to suspend its dividend to conserve cash. The Maytag brand of washers became a household word, linked in American culture with the long-running TV commercials featuring Ol’ Lonely, the Maytag repairman. Hoover is one of the best-known vacuum brands in the United States.
Standard & Poor’s on Friday cut Maytag’s debt ratings to junk, a move that can significantly raise borrowing costs. The agency cited weak operating earnings, but noted that Maytag has adequate liquidity. It assigned a stable outlook, saying it expects new products and restructuring to aid margins.
Maytag, which reported an 80 percent drop in first-quarter earnings and cut its full-year outlook in half last week, said it was working on a financing plan with banks to reduce manufacturing costs. It said it would review its dividend.
Maytag’s stock was down 58 cents at $10.31 in early afternoon trade on the New York Stock Exchange, while shares of rival Whirlpool Corp. (WHR.N: Quote, Profile, Research) fell 10 cents to $64.43.
MAYTAG SAYS IT HAS “CASH IN HAND”
Company spokeswoman Karen Lynn said on Monday that Maytag does not comment on takeover speculation. She reiterated that the company would review its dividend policy.
“We are still profitable,” Lynn said, adding that although first-quarter sales fell, market share improved from the fourth quarter of 2004 and floor-care sales met company expectations.
“We believe this shows that consumers believe in and are buying our brand,” Lynn added.
Lynn also said Maytag’s debt levels were down from a year earlier. She pointed out that the company increased its cash and cash equivalents to $99 million.
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