Whirlpool (WHR) does not have a company mascot like the Maytag Repairman. His marketing pitch is that Maytag products never need to be fixed. He is a man without work, which makes Maytag products without equal.
Whirlpool had some of the durability dust rub off on it, and that may have hurt earnings. The company reported modest operating income of $122 million in the third quarter compared with $196 million last year.
Revenue rose a tick to $4.9 billion. The most remarkable thing about the quarter is that Whirlpool shipped 11% fewer major appliances than it did in same period last year. On account of that and a grim forecast, 5,000 poor souls at the company are losing their jobs.
Whirlpool does not think much of the days ahead. For the full-year 2008, the firm expects earnings per share from continuing operations to be $5.75 to $6.00 compared with its previous estimate of $7.00 to $7.50 per share.
Part of the problems facing Whirlpool is that its products are just too damn good. It is not unlike the trouble that the car companies have. JP Power recently said US consumers are delaying auto purchases by over four months longer than they did just last year. To some extent, buyers can hold back because the cars still run fine. Slightly less sturdy models might need to be replaced more quickly.
While there is irony in the fact that better products allow consumers to delay purchases longer, during a recession product durability can be a liability.
Douglas A. McIntyre
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