``We're in the clutches of a major recession for the paper industry,'' Matthew Berler, a forest products industry analyst with Morgan Stanley Dean Witter, said.
``Look for more announcements,'' said Deutsche Banc. Alex Brown's Mark Wilde after a string of major paper and wood products companies warned next month's reports of first-quarter financial results will probably be even worse than Wall Street's already-lowered estimates.
The latest warning of poor earnings came Friday from newsprint producer Bowater Inc. which said that due to production cuts and lower pulp prices it expects earnings of 50 to 60 cents per share for the quarter, including the benefit of 11 cents per share from stock-based compensation items. Analysts on average had expected operating earnings of 76 cents per share, according to research firm Thomson Financial/First Call.
Bowater's announcement came after similar ones from packaging giants Smurfit-Stone Container Corp., Temple-Inland Inc., and Mead Corp., timber company Louisiana-Pacific Corp., and wood products company Potlatch Corp.
``Almost across the board, in every product, the drop is as dramatic as in any period since the last recession in 1990-91,'' said Berler.
Berler said he didn't see much relief until the second half of the year as a result of permanent and temporary plant and mill closures and companies controlling their inventory backlogs.