From Associated Press via MEMA Industry News
TOLEDO, OH — Dana Corp. crashed to at least a 36-year-low on Friday when shares fell 52 percent in heavy trading amid reports that the struggling auto parts maker has hired a restructuring company.
Dana shares closed at $1.51, down $1.64, on the New York Stock Exchange. The shares have been as high as $17.03 in the past year. Volume was about 50 million shares, compared with average volume of 2.8 million shares.
The Toledo, OH-based company has hired Miller Buckfire & Co., which often helps businesses facing financial trouble, the Wall Street Journal reported Friday, quoting people familiar with the matter.
Dana spokesman Chuck Hartlage on Friday declined to comment on the report. He said the company will not discuss financial issues until its fourth quarter financial results are released. No date has been set.
A message seeking comment was left with Miller Buckfire in New York was not returned.
The closing stock price on Friday was below any listed price on the company’s Web site going back to 1970. Dana stock has traded on the New York Stock Exchange since 1922.
The company’s stock has been in a downward spiral since it said last fall it was restating earnings and lowering its profit forecast for 2005 because of accounting errors.
Dana said in January that it lost nearly $1.3 billion in the third quarter due to restructuring efforts. Earlier this week, it said it would postpone its dividend payment to shareholders.
Ronald Tadross, an analyst with Banc of America Securities, this week slashed his profit outlook for Dana to break-even for 2006 from $1 per share and forecast a loss of 75 cents a share in 2007. He also cut his 12-month price target on the stock to $3 a share from $6.
He said it will be harder for the company’s cost reductions to offset an erosion in profits.
The maker of brakes, axles and other parts supplies car manufacturers including Ford Motor Co. and General Motors Corp. But suppliers have been sandwiched in the past year by rising energy costs that have driven up the price of raw materials while weighing on demand for gas-guzzling sport utility vehicles and pickup trucks.
Delphi, the nation’s leading parts supplier, filed for bankruptcy protection last October. Visteon Corp., the second-biggest supplier, is closing three plants and putting another six up for sale under a restructuring plan.
Dana is overly dependent on Ford and GM, which are losing market share, producing fewer cars and requiring fewer parts, said Kim Hill, associate director at the Center for Automotive Research in Ann Arbor, MI.
For Dana to turn itself around, the company will have to diversify its customers, picking up contracts with other manufacturers such as Toyota, Honda and Hyundai, Hill said.
Dana announced plans last year to cut its salaried work force by 5 percent, close three plants in North America and Australia and sell parts of its business to sharply reduce costs.
The moves will drop Dana’s employment to about 36,000. The company had 79,000 workers eight years ago when it bought Echlin Inc. in what was one of the biggest mergers in the auto parts industry.
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