A couple of weeks later Bonsignore blindsided investors by saying business was eroding, blaming higher oil prices, supplier problems in certain business and electronic-component shortages. Instead of 78 cents per share, earnings would be between 73 and 77 cents. Bonsignore said the results for May had yet to be tallied when he first spoke reassuringly in June about making the numbers. But the stock already had fallen hard and many stock portfolio managers, who hate even small surprises, knew whom they wanted to blame. This company has huge reserves on its books and it should have maximum financial leverage to make the numbers.
Big companies have a certain amount of wiggle room.
Wall Street's concern is that Bonsignore got earnings and margins up at old Honeywell, but he never got the margins and the stock price return where Wall Street thought it should be. I still think the Honeywell-Allied combination will be dynamite. But the Street is in a 'show-me' mode. Bonsignore's task has been made more difficult by the track record of Lawrence Bossidy, his predecessor, who did whatever it took to make quarterly earnings at the old Allied. Bossidy, who retired as chairman in April, built Allied into an earnings machine through a series of acquisitions, divestitures, aggressive accounting and tight cost controls.