3M earnings beat prediction as shares rise

Tuesday’s generally negative earnings contrasted with the rise of 3M Co’s shares to 5 percent as they reported a 3.2 percent rise in their quarterly earnings.

3M Co’s businesses include high tech industrial products such as chemicals used in aircraft maintenance to consumer goods like Post-it notes. With US demand slowing, 3M has been dependent on foreign markets for growth.

"They're definitely benefiting from the fact that they make things that everybody needs," said Sterne Agee analyst Nick Heymann, noting that international markets generated 62 percent of the company's sales.

This Minnesota-based company posted third-quarter net income of $991 million, or $1.41 per share, compared with $960 million, or $1.32 per share, a year earlier.

Reduced expectation

3M posted earnings of $1.42 per share, which topped analysts' estimates of $1.38 per share, excluding special items. Revenue rose 6.2 percent to $6.56 billion, a bit short of analysts' estimates of $6.67 billion.

3M predicted its 2008 earning in the range of $5.40 to $5.48 per share, an 8 to 10 percent increase, instead of the minimum 10 percent increase it had previously predicted. Analysts see 2008 earnings of $5.45 per share.

But even that deduction translated into a positive against reduced expectations, as the outlook was "far from the disaster many have come to expect," wrote J.P. Morgan analyst C. Stephen Tusa Jr, who rates 3M shares "overweight."

"There is no 'hope' factor here, a positive in the current environment," Tusa wrote.

The company is cutting costs by firing some 1000 people across United States, Europe and Asia.

The Asian cuts were focused heavily on the optical films business that has been struggling as TV manufacturers rejected 3M's high-end product in order to drive down the cost of flat-panel sets.