THE BUZZ ON 3M by Dawn Feliciano

Jot this down--you reach for a Post-It note, your pen is poised to strike. We’re talking about 3M, dear
Fools, and how it is so much more than office convenience items.

And even if, with a net of $928 million ($1.28 per share vs. $1.30 per share in the corresponding period of
the previous year) they didn’t post higher earnings for the Fourth Quarter FY10, they want you to know
that their $6.7 billion in sales was an increase of 9.6 percent. Overall sales increased 15.3 percent,
compared to 2009.

Organic volume—which doesn’t factor in price increases, currency effects or contributions from
acquisitions, for that matter--increased 8.6 percent and was seen in all six of 3M’s sectors, most notably
Electro and Communications (26.9%), Display and Graphics (26.5%), and Industrial & Transportation
(16.9%). Other major sectors in the 3M enterprise seeing growth were Health Care (transparent wound
bandage, anyone?) and Safety, Security and Protection Services, as well as the notorious Consumer and
Office sector. Organic volume growth was strongest in the Asia Pacific region at 18.1 percent and Latin
America at 12.2 percent.

The buzz is that 3M is in transition: in the creation of the latest and greatest innovation products, its
sizeable acquisitions in 2010, the restructuring of its pension and post-retirement expenses, and the
leadership. The buzz is a mixed bag (of bees?). In response to lower earnings at the close of the fourth
quarter, the price of the stock fell from $90.32 to $88.50, with about 7.5 million shares changing hands,
according to the Star Tribune. CEO George W. Buckley insists he will stay on till 2012, at which point a
successor from inside the company will take the helm.

But 3M is an innovation company: it makes sense that it would invest in positioning itself in the emerging
economy, at home and abroad. So, while 3M divests itself of H1N1-related products and outdated optical
systems for LCD TVs, it is forging ahead in orthodontics (yes, orthodontics), and security systems. 3M is
also feeding the techie appetite of the Far East (sounds more exotic than Asia, n’est-ce pas?) and Latin
America. China is predicted to represent 1/10 of sales and operating income by 2015, and 3M plans to
add the “hidden gem” Central and Eastern Europe, as well (Source: 3M: Innovating Toward Faster
Growth, February 9, 2011).

So, dear Fools, do you think 3M can forecast itself into higher earnings? Share your thoughts in the
comment box below.