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December 10, 2012

Honeywell Announces Purchase of Intermec for $600M, Forecasts Lower Earnings in 2013

The U.S. diversified manufacturing company Honeywell (News - Alert) International Inc. has a somewhat slow forecast for its 2013 profitability, in part due to a deal the company has recently made with Intermec (News - Alert).

Wall Street’s estimates came in low on Monday, which makes sense as sales have been falling in the aerospace and transportation sectors -- sectors which affect Honeywell directly.

As this trend was expected, some might assume Honeywell owes its forecast to the impending doom posed by the suggested “fiscal cliff,” which has possibly had an impact on trading in the last few months.

Businesses could be hesitant due in part to the fears posed by the potential of going over the fiscal cliff, as the chief executive officer of Honeywell David Cote has made clear in the past.

However, in the statement regarding the 2013 forecast he made on Monday, Cote did not cite the fiscal cliff as a reason for the company’s lower earnings.

Specifically, shares of Honeywell were down 0.2 percent at midday trading on Monday, bringing the number to $61.86 per share.

Additionally, Honeywell announced on Monday its plans to buy the mobile computing device maker Intermec, for about $10 per share. This rate marks the purchase total at $600 million. This deal also gives Intermec shareholders a 25 percent premium from Friday’s closing stock price.

It was reportedly due to this new deal with Intermec that the announcement of Honeywell’s 2013 forecast was pushed up a week.

David Anderson, Honeywell’s CFO, participated in a conference call with investors to discuss both the Intermec deal and the company’s expected profits for 2013.

In the call Anderson said the deal with Intermec “really enables Honeywell to be a leader of rugged mobile computers and scanners in the AIDC (automatic identification and data capture) space.”

Anderson also explained that Honeywell expects the Intermec deal to dent its 2013 earnings by about 3 to 4 cents per share, leaving a profit of $4.75 to $4.95 per share, and a total revenue for 2013 of $39 billion to $39.5 billion.

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Edited by Rich Steeves

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