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DuPONT'S DIET MAY NOT BE OVER

DuPont (DD) has been shedding fat fast. It slashed costs by $3 billion in the past four years and raised labor productivity by 3% a year, according to analysts. But some investment pros are betting DuPont will do much more to please investors who think the stock, now at 82, merits a higher price. Paul Raman, an analyst at PaineWebber, insists that DuPont will sell some important assets.

``DuPont's repurchase of shares held by Seagram was the catalyst for the big future change,'' says Raman. In April, 1995, DuPont paid $8.8 billion to buy back 156 million shares from Seagram. And last July, DuPont bought back warrants for DuPont stock that Seagram also held, for $500 million.

Raman is betting that DuPont CEO Jack Krol ``has a scheme in mind--one that could make the stock go as high as 95 to 100.'' Krol, he believes, will opt to sell Conoco--which DuPont acquired in 1981--for $12 billion to $14 billion, or $20 to $22 per share in DuPont stock. Conoco has $800 million in aftertax income and $2.1 billion in aftertax cash flow, notes Raman.

The analyst says that DuPont will use the cash to pay down debt, repurchase a huge number of shares, and bolster its key businesses overseas, including nylon, agrichemicals, titanium oxide, and specialty fibers.

``I expect DuPont will also shed its imaging and coal businesses,'' says Raman. The imaging business (films and printing systems), he notes, generates sales of about $800 million a year. He believes the operations will be bought by Xerox or Fuji Photo Film of Japan for about $700 million.

DuPont's 50% stake in the coal business (co-owned with Consolidated Energy) produces operating income of $90 million and may end up with a German energy company for about $1 billion, says Raman. A DuPont spokeswoman says the company has a policy not to comment on speculation.

By GENE G. MARCIAL


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Updated June 14, 1997 by bwwebmaster
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