Harman Share down 38% yesterday

[4345]

While the growth fundamentals of our core business remain sound, the difficult portable navigation devices environment presents a challenge," Chief Executive Dinesh Paliwal said in a statement.

Paliwal added that the company has posted "higher than planned" R&D engineering and material costs. Harman did not provide a current earnings estimate using generally accepted accounting principles because restructuring costs have not yet been determined. Acquisition and restructuring costs relate to a proposed buyout of Harman by Kohlberg Kravis Roberts and Co. and GS Capital Partners, an affiliate of Goldman Sachs, for $120 per share in cash. The takeover soured in September, when the buyers expressed concern over the company's financial health.

[boputnam]

Yea, bummer. I thought I'd paste the entire release...

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HARMAN INTERNATIONAL REVISES FISCAL YEAR 2008 EARNINGS GUIDANCE
WASHINGTON, D.C. January 14, 2008 – Harman International Industries, Incorporated

(NYSE: HAR) today revised its previously announced guidance for the current fiscal year ending June 30, 2008. The Company now expects non-GAAP diluted EPS for the 2008 fiscal year to be between $3.00 and $3.10, before after-tax merger related costs of $8.0 million, or $0.13 per diluted share but including the impact of the Company’s ongoing accelerated share repurchase (ASR). Because the accounting impact of previously announced restructuring charges has not been determined, it is not included in the current estimate and, therefore, no GAAP diluted EPS for the fiscal 2008 year is provided.

The change in guidance was prompted primarily by a major shift in the market for Portable Navigation Devices (PNDs). In recent months this sector has experienced significant pricing pressure which is affecting the entire industry. “While the growth fundamentals of our core business remain sound, the difficult PND environment presents a challenge. As we have indicated previously, we will be launching a record number of automotive infotainment platforms in 2008. Although, we are not happy with the higher than planned R&D engineering and material costs, the additional investment is necessary to deliver the new platforms to our valued customers,” said Dinesh Paliwal, Vice Chairman and Chief Executive Officer. “Harman continues to have excellent business prospects, and we are confident that we will capitalize on these opportunities as we position our Company to achieve its full potential.”

The Company is implementing a series of strategic initiatives to optimize its global footprint in manufacturing, engineering and sourcing, to drive profitable growth and to enhance shareholder value. The Company will provide further details on these initiatives during its quarterly earnings conference call on February 5, 2008.

Harman International designs, manufactures and markets a wide range of products for the automotive, consumer and professional markets. Its brands include Harman Kardon®, JBL®, Revel®, Mark Levinson®, Infinity®, Lexicon®, Soundcraft-Studer®, AKG®, Becker® and QNX®. The Company maintains a strong presence in the Americas, Europe and Asia and employs more than 12,000 people. Harman International (www.harman.com) is a leading manufacturer of high-quality, high-fidelity audio products and electronic systems for the automotive, consumer and professional markets. The Company’s stock is traded on the New York Stock Exchange under the Symbol: HAR.

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Very odd share trading pattern - gaps up and lately, big legs down...

[johnaec]

If this trend continues, maybe we can take up a collection here and buy out the company!

John

[edgewound]

This whole movement in HAR's stock price and the buyout scenario smells unusual. Can the company's finances and outlook be that bad?

Or...is it orchestrated by the buyers to manipulate the stock price to swoop in at a major discount?

Shareholders....vested Harman employees must be livid...this is a travesty....though HAR has had a great run for more than a decade.

[boputnam]

This whole movement in HAR's stock price and the buyout scenario smells unusual. Can the company's finances and outlook be that bad?

In this market, yes. As you know, valuations discount the future - which for any/all consumer products companies looks pretty dicey. Inflation racked up a +4.1% increase for 2007, WITH food and energy (anyone who excludes those two must not eat and not commute = moronic). That bites into discretionary spending, which for years was funded through home equity "drawdowns" through escalating refinancings and also lines of credit. Those sources are now gone. Few save. This situation is squeezing the pocket books, big time.

Or...is it orchestrated by the buyers to manipulate the stock price to swoop in at a major discount?

Uh, no. Far too easy to track these days. Any such behavior would be greeted by "big hair" (code name for SEC) knocking at the front door of the buyers.

Shareholders....vested Harman employees must be livid...

It hurts that's for sure. Volume tells that some big holders are liquidating - and are not price sensitive. "Hit the bid" is the mantra.

The market is quite unsettled right now. Risk is being repriced at an aggressive rate - just look at the rise in the gold price. Investors are seeking safe havens, but are fickle and freaked. This leads to indiscriminate selling...

[hjames]

Harman to Move District Staff to Connecticut

By Thomas Heath -
Washington Post Staff Writer
Tuesday, January 29, 2008; Page D01 (link to WaPo article)

Harman International Industries, the multibillion-dollar manufacturer of high-end audio equipment and electronic systems, will move its District headquarters staff to Connecticut by the end of the year, the company said yesterday.

The company this month informed its 30 or so D.C. employees that it will close its Pennsylvania Avenue office and relocate some of them to Stamford, Conn., north of New York City, where the company's new chief executive works.

"This is part of a multi-part move," said Harman spokesman Brad Hoffman. "We currently have corporate employees located in D.C.; Northridge, Calif.; and Stamford; and along with some likely cost savings, the bigger part of the picture is really an attempt to consolidate corporate functions in one location close to the New York financial markets to improve communication between these folks and our executive management team."

Hoffman said he did not know whether the company would technically keep Washington as its headquarters, or whether that designation would change.

The company has more than 11,000 employees in offices and plants around the world. It had more than $3.5 billion in sales in the fiscal year ended June 30.

Most of the D.C. employees are part of the executive team and the financial end of the firm. Some will remain in the Washington area, "if not in the Pennsylvania Avenue offices," Hoffman said.

Hoffman said he did not know whether company Chairman Sidney Harman, an author and philanthropist who is married to Rep. Jane Harman (D-Calif.), would also relocate.

Sidney Harman is president of the District-based Harman Family Foundation, which has given to such local institutions as the Washington Ballet, the Washington National Cathedral Choral Society and the Phillips Collection. He pledged $20 million for the new Harman Center for the Arts in downtown Washington, which is home to the Shakespeare Theatre Company.

"I would not be surprised if he continues to maintain a presence in the Washington area," Hoffman said.

An assistant to Harman said he was on an airplane yesterday and was unavailable for comment.

Harman International produces cutting-edge electronic equipment, including high-tech home audio systems, concert hall and movie theater sound systems, and automobile infotainment digital platforms. Its nameplates include JBL, Harman Kardon, Mark Levinson and Infinity.

The move follows several turbulent years for the company. Last April Harman negotiated a deal to sell the firm to buyout giants Kohlberg Kravis Roberts and Goldman Sachs for $8 billion, only to see the deal collapse a few months later when KKR and Goldman reneged. The deal would have allowed shareholders to maintain an interest in the company once it went private.

Harman and KKR/Goldman then reached a compromise in which the buyout firms purchased $400 million worth of Harman's senior bonds at an interest rate of 1.25 percent. The investment allowed the buyout firms to avoid paying a $225 million termination fee.

The company last year also hired a new chief executive, Dinesh Paliwal, after a year-long search. A previous chief executive, Douglas A. Pertz, was let go with a $3.8 million severance package after only four months on the job.

Paliwal has offices in Stamford, where several other Harman managers have joined him. Hoffman said the company did not have a manufacturing facility in Stamford, "but it's close to properties we have in Woodbury, Long Island, as well as smaller Harman facilities in the state of Connecticut."

Harman stock took a nosedive two weeks ago, shortly before the company cut its earnings forecast. Its shares closed at $42.37 yesterday, up 9.5 percent. The stock is down 66 percent from its 52-week high.

[Ian Mackenzie]

If this trend continues, maybe we can take up a collection here and buy out the company!

John

John,

In a simplistic sense its the nerve or lack of it that is creating this type of short term risk / opportunistic thinking.

A business the size of Harman and the types of markest could be doing everthing right and the shares will be all over ther place.

Although if it took that long to find a new CEO you could be forgiven for thinking if you pay peanuts you get monkeys or its just too difficult to manage.I wonder how the rest of the board measures up?

That lack of confidence in the U.S and the sub prime lending problem has wiped billions off the Australian share market recently.

[RKLee]

.
.
That lack of confidence in the U.S and the sub prime lending problem has wiped billions off the Australian share market recently.

Wow, that is sad, but this gives the old saying, "When the USA sneezes, the rest of the world catches a cold" a whole new meaning. Who says that the US is not important in the world market place. Wiping out billions of dollars whether it is AUS or USA is not fun.