(Adds analyst comments, changes dateline from NEW YORK, updates stock activity)
CHICAGO, June 23 (Reuters) - Auto parts maker BorgWarner Inc. on Monday said it settled a patent dispute over turbocharger technology with Honeywell International Inc. , agreeing to pay Honeywell a total of $29.1 million.
BorgWarner also confirmed its earnings guidance for 2003.
Shares of both companies slid following the announcement.
BorgWarner, based in Chicago, said in a statement its turbo systems unit settled a dispute with Morris Township, New Jersey-based Honeywell over variable geometry turbochargers by extending a licensing arrangement through 2006. Payments related to the settlement will be made beginning in 2003 and ending in 2005.
BorgWarner forecast its 2003 earnings in the range of $6.20 to $6.35 per share. Analysts on average were expecting 2003 earnings of $6.24 a share, with estimates ranging from $5.77 to $7.00 a share, according to Thomson First Call.
Merrill Lynch analyst John Casesa said BorgWarner had factored the settlement into its earnings guidance for 2003 but costs from the deal could cause analysts to cut 2004 profit estimates for the company.
For 2004, analysts forecast earnings of $7.02 a share, in a range of $6.14 to $7.90 a share.
"We believe (analysts' 2004 consensus estimate) will come down as a result of the licensing payments impact," Casesa wrote in a research note.
Casesa estimated BorgWarner's after-tax costs for the licensing payments at 30 cents a share in 2003, 35 cents in 2004 and 8 cents in 2005.
Shares of BorgWarner were down $2.01, or 3 percent, at $63.93 in early afternoon trade Monday on the New York Stock Exchange, while Honeywell's stock slid $1.15, or 4.04 percent, to $27.31. (Additional reporting by Nichola Groom in New York)