Harman Expects Lower Earnings; Asian Crisis Blamed
"Consumer and Professional Division sales in China will be 80% of plan in fiscal '98. Sales to Japan will be only 60% of plan and sales to the rest of Asia will be less than 40% of plan," Dr. Harman stated. "For the full year we will have lost $90 million in sales in Asia plus $60 million in sales in Europe and North America, arising from Asia-related currency impact and the strike in Denmark." Denmark is a major producer of loudspeakers and audio electronics.
"The Consumer and Professional sales declines have been substantially offset by continuing strength in the OEM Division. As a consequence, we now expect fiscal '98 earnings in the range of $2.80 to $3.00 per share," Dr. Harman elaborated. Analysts predicted earnings of $3.06. Harman International stock (NSYE: HAR) closed last Friday at $38.06, down from a high of $57.06 on October 10.
Dr. Harman also announced that the company's Consumer and OEM groups would be combined under the direction of Gregg Stapleton. "Our Consumer Group has been burdened by the Asia collapse and the Danish strike, by currency and a generally soft consumer electronics market. This step will strengthen its efforts in engineering, manufacturing, and procurement---three areas in which the OEM Group is unusually effective."
He intends to remain active as chairman for "the next period of years," Dr. Harman said; he expects that Bernard Giroud will be elected Chief Executive Officer at the next shareholders' meeting, scheduled for November 10. No mention was made of Harman's wife's recent defeat in the California gubernatorial primary election. Representative Jane Harman, a Southern California Democrat, spent tens of millions in her losing bid for the state's highest office.