Blyth Shares Jump on Possible Unit Sale

Blyth Inc., Greenwich, CT, shares jumped more than 15% on Tuesday after the company said it is considering selling its wholesale business if it can’t continue with a planned spinoff. The maker of home decor products said it soon expects a ruling from the IRS over whether it can proceed with the spin-off as a tax-free event. The company hops to complete the transaction by next spring. However, Bob Goergen, Blyth, chief executive, said if the IRS doesn’t allow the deal to be tax-free for shareholders. He said the company is considering “additional strategic opportunities” for the business, a phrase often interpreted by Wall Street to mean a sale, however, he denied Blyth was considering a full sale of the company. Shares advanced sharply after the conference call, despite posting earnings late Monday that did not meet Wall Street projections. Shares closed up $3.07(15.1%) at $23.29 on the New York Stock Exchange, and earlier changed hands as high as $23.68. Blyth reported late Monday its fiscal third-quarter profit dropped 24%. For the three months ended Oct. 31, Blyth’s profit slid to $23 million (56 cents per share) from $30.2 million (73 cents per share) a year ago. Analysts surveyed by Thomson Financial were looking for latest-quarter profit of 67 cents per share. Revenue inched up 1% to $444.5 million from $439.4 million. However, Blyth said sales would have declined except for a boost from an acquisition. The company attributed this drop for existing business sales to poor results at its direct selling segment. According to the company, higher freight surcharges and increased prices for raw materials further cut into sales. For fiscal 2006, Blyth said it now expects to earn $1.41 to $1.46 per share ($1.65 to $1.70 per share) excluding a charge for repatriating foreign earnings. Previously, the company had forecast year-end earnings of $2 to $2.05 per share, including the wholesale business. Analysts expect a year-end profit of $1.71 per share.