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Stanley Black & Decker Big Dog Promise

Medieval Black & Decker

Image by ines saraiva via Flickr

Stanley Black & Decker (SWK) made investors happy and pushed the stock to a 52 week high. They have been successful in achieving cost synergies through the merger of both Stanley and Black & Decker. They delighted investors with this quote from the press release

Today, management is updating this estimate and now believes the company will achieve $425 million in cost synergies by the end of 2012. ……The overwhelming majority of this $75 million excess over the original $350 million target is projected to fall to the bottom line.

The quote is not attributed to a specific executive but it is integral to the press release. Several other quotes were made such as

“Stanley Black & Decker’s President and CEO, John F. Lundgren, commented, 2010 was a landmark year for Stanley Black & Decker, driven largely by the significant progress we made in integrating Black & Decker. Notably, we were able to achieve 7% organic growth for the year on a pro forma basis amid an uncertain economic environment while continuing the integration in a manner that allowed us to exceed our original cost synergy targets.”

and

“Executive Vice President and Chief Operating Officer, James M. Loree, commented, “We are thankful to our associates for executing this major integration smoothly and effectively thus far. We are excited that we could today raise our merger-related cost savings targets to $425 million, $75 million above our original estimate, and at the same time, introduce a commitment of between $300 and $400 million for revenue synergies”

Revenue synergies is an interesting word. Most executives say growth. Time will tell. Yes they have managed costs very well. But you will need to grow revenue through new and enhanced products. I hear no talk about upcoming products that will drive shareholder value.

Disclosure: “George Gutowski” writes from a “caveat emptor perspective” . I hold no positions in stocks mentioned in this post. I do not intend to open up a new position in the next 72 hours.

 

 

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