Wall Street Watch Thursday: Armstrong Closes the Door on Cabinets
Armstrong World Industries (AWI) would rather dance on the ceiling or bounce on the floor than continue to make cabinets.
Armstrong revealed that it would be selling its cabinetry business after Wednesday's market close.
The maker of flooring and ceiling products for the residential and commercial markets is selling its cabinets business to American Industrial Partners in a $27 million deal. The subsidiary generated $136 million in sales last year, so it's safe to say that it was losing money if Armstrong was willing to let it go for so little. If so, this transaction would be a textbook case of addition by subtraction: Armstrong improving its overall profitability and giving it more focus would be good things for the company.
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Armstrong's flagship businesses will continue to be flooring and ceilings, from linoleum and hardwood planks to panels and tiles. Cabinetry products accounted for less than 5% of the company's revenue last year.
The sale is expected to close by year's end, but Armstrong will begin classifying the cabinets business as a discontinued operation starting with the current quarter.
Other Things Worth Watching
• Worthington Industries (WOR) is making metal pay. The value-added steel processor posted a quarterly profit of $0.49 a share on $666 million in revenue after Wednesday's close. The performance holds up well against the $0.35 a share it earned a year earlier on $602.4 million. Worthington's numbers also landed slightly ahead of what Wall Street was targeting.
• Research In Motion (RIMM) won't report its latest quarterly results until Thursday afternoon, but investors will nervously be trading in or out of the stock in anticipation. It won't be pretty. Wall Street is braced for the BlackBerry maker's third consecutive quarterly loss. They're also eyeing a whopping 40% plunge in revenue. The smartphone market is booming, but RIM is not. There is still some hope that its upcoming mobile operating system update will help renew interest in the platform, but time isn't exactly on RIM's side these days.
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article.
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