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Stanley Works Inc. (SWK) barely managed to eke out a fourth-quarter net profit, hurt by the cost of job cuts sparked by falling demand for its tools and hardware on declining construction and manufacturing activity.

Chief Executive John F. Lundgren said, "We are operating from a position of strength in the most difficult environment in memory." The company projected 2009 shipments falling 10% to 12% from 2008, suggesting a potential drop in earnings per share of about $2 to $2.25, but it held off on giving a forecast amid recent economic uncertainty.

The maker of such tool brands as Stanley, Mac Tools, Bostich and Husky reported net income of $1.1 million, or 1 cent a share, down from $92.3 million, or $1.11 a share, a year earlier.

The latest quarter included a work force-reduction charge of 59 cents a share related to last month's announcement of 2,000 job cuts, or 10% of the company's work force.

Net sales fell 4.6% to $1.09 billion, with the stronger dollar contributing 5 percentage points to the decline.

Analysts surveyed by Thomson Reuters were expecting Stanley Works to report earnings, excluding items, of 34 cents a share on revenue of $1.05 billion.

Gross margin fell to 36.1% from 37.3% on slumping volume and the stronger dollar.

When it announced the job cuts in December, Stanley cited an "exceptionally severe" contraction in its construction and do-it-yourself and industrial businesses. Although the company has reduced its historically heavy reliance on consumer do-it-yourself sales, it continues to generate about a third of its revenue from that segment, Moody's Investors Service said last week. In the quarter, the unit accounted for 6.4% of net sales, down from 13.7% a year earlier.

Earnings in the construction and do-it-yourself segment, Stanley's largest business, fell 61% on a 16% sales drop. Industrial-segment profit fell 38% on a 9.8% sales decline. Security-business profit, however, rose 27%, as sales climbed 14%.

Like other companies, Stanley balked at providing a forecast for future periods, citing economic uncertainty. The company "will not be providing full year 2009 guidance until the economic conditions and end markets stabilize sufficiently to provide reasonable visibility," it said.

Shares closed at $30.96 on Tuesday, up 1.4%, and didn't trade premarket.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; mike.barris@dowjones.com

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