The investor focus
Procter profit warning clobbers stock

Thursday, September 10, 1998

The Cincinnati Enquirer

Investors devalued Procter & Gamble Co. stock Wednesday -- sending it down $7.75 a share, or 9.7 percent from its Tuesday close -- after the company again warned of an earnings shortfall and named a new chief executive.

"That's a big drop for the day," said Timothy E. Johnson, president of Johnson Investment Counsel in Monfort Heights and a longtime follower of P&G.

Stock in the largest U.S. consumer products maker closed at $71.87 1/2, leading the Dow Jones Industrial Average into negative territory for the session. For the year, P&G shares are down 10 percent. The stock was up as much as 17.8 percent for the year at its July 6 peak of $94.

While the market as a whole has fallen dramatically since mid-July, P&G's decline has outpaced its blue chip peers.

Analysts said the sharp decline Wednesday wasn't a vote of no confidence in the newly announced chief executive, Durk Jager, as much as it was disappointment over the company's weakening financial results.

"It has nothing to do with the management changes and everything to do with the shortfall in earnings," said William F. Bahl, a partner at Bahl & Gaynor, downtown.

P&G told analysts July 30 that earnings growth would slow -- to the 10 percent to 12 percent range from previously expected 12 percent to 14 percent range -- in the coming year. The company blamed Asia's faltering economies, the rising dollar and increased competition. Wednesday, Procter warned that results for the fiscal first quarter that ends this month would rise in the "mid-single digit range."

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