Emerson Electric Co. (EMR) said it may cut its work force by 10% this year as the company reduces costs and realigns its business lines.

David Farr, chairman and chief executive of the diversified manufacturer, said Friday total employment will likely drop to 120,000 people by the fall from 134,000 at the end of 2008.

A year ago, Emerson employed 141,000 people. About 30% of the company's employees are in North America.

The St. Louis-based company reiterated its earlier guidance for 2009 of earnings per share of $2.70 to $2.95 on sales of $23.5 billion to $25.5 billion.

Wall Street analysts expect Emerson to earn $2.69 per share on sales of 23.3 billion.

Emerson anticipates 2009 base sales falling 3% to 6% from 2008 with the slump continuing into 2010. As a result, Farr said the company is reducing its production capacity and focusing on business lines and geographic markets with the most growth potential.

"With volume coming down, your head count will come down," he said during an investor conference in New York." "We're taking production down."

The company, which produces motors, alternators and automation control systems and components, expects its restructuring efforts will save about $140 million annually. Farr wants to parlay that savings into $2.5 billion to $2.7 billion of free cash flow in 2009 that he intends to use for acquisitions and increased investments in emerging markets overseas.

Farr said the company is eyeing as many as eight potential purchases and expects to wrap up at least one "marquee" acquisition in 2009 that will cost about $1 billion, but will also bring Emerson at least $1 billion in annual new revenue.

"A lot of our competitors don't have the money and a lot of businesses want to sell out. We're going to take advantage of it," Farr said.

Farr said the company will continue to shrink its presence in making components for household appliances, but will accelerate investment in gear for computer data centers and transfer equipment for electric power.

Emerson expects emerging markets, such as China, to drive the company's long-term target of 5% to 7% annual sales growth.

"We plan to make headway in the emerging markets in the next two to three years," Farr said.

Emerson predicted 34% of annual sales will come from emerging markets by 2010, up from about 30% in 2008.

By 2010, the company anticipates international business accounting for 58% of all sales, compared with 54% last year.

Emerson was recently up 1.17% at $33.66.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com