Waste Management Inc.'s (WMI) fourth-quarter net income dropped 29% on lower revenue and margins, and demand crumbled in its industrial and recycling businesses.

As such, the nation's largest garbage hauler and landfill operator announced plans to cut more than $100 million in annual costs from streamlining field operations, cutting corporate staff and freezing salaries.

A spokesperson said the company will be cutting around 1,000 positions from its 46,000-strong work force.

Analysts have expected waste fundamentals to remain positive this year, citing favorable pricing and lower fuel costs. Still, the sector isn't recession-proof and could be hurt by weak volumes and lower recycling-commodities prices as the downturn continues.

Chief Executive David Steiner said Thursday the majority of Waste Management's business, from commercial and residential customers, is "recession-resistant," though a sharp decline in demand led to "greatly reduced" volumes and "steep" price declines in its more economically sensitive industrial and recycling businesses.

With the economic downturn lowering prices of assets, Steiner said, the company is looking for acquisitions in the new year. On a conference call, he said they are interested in additional opportunities in solid waste, and said medical waste "would be an area where we would be looking to make opportunistic acquisitions." Also, "we're going to be looking at waste-to-energy opportunities," he added.

The industry has turned to acquisitions to expand and create efficiencies amid modest revenue growth. The sector has gone through several waves of consolidation as larger companies buy up regional operators, though some acquirers have had difficulty integrating and managing their operations.

Analysts expect Waste Management to be interested in purchasing some of the $500 million of assets that have been put up for sale as part of the merger agreement between Republic Services Inc. (RSG) and Allied Waste.

Steiner said that the company hasn't taken a hard look at those assets yet and assured investors that they "will not make any acquisitions that would jeopardize our strong balance sheet or our credit rating." That was threatened last year through its effort to acquire Republic Services in an attempt to stop Republic from acquiring Allied Waste.

The garbage hauler's fourth-quarter profit was hurt by 8 cents from deterioration in the recycling-commodities markets. A 15-cent to 20-cent impact is expected in 2009, most of it coming in the first half of the year.

Waste Management reported fourth-quarter net income of $218 million, or 44 cents a share, down from $309 million, or 61 cents a share, a year ago. Excluding pension impacts in the latest quarter and prior-year gains, earnings fell to 49 cents from 54 cents.

Revenue decreased to $3.1 billion from $3.4 billion.

Analysts polled by Thomson Reuters had projected per-share earnings of 48 cents with $3.2 billion in revenue.

Operating margin fell to 14.8% from 17.1%. Revenue from collections, its biggest business, dropped 5.4%, while the much smaller recycling business recorded a 37% slump. Landfill revenue slipped 6.7%.

For 2009, the company said it expects to generate between $1.3 billion and $1.4 billion in free cash flow.

Waste Management shares rose 1.2% to 28.80. The stock is down 13% over the past 52 weeks.

-By Shirleen Dorman, Dow Jones Newswires; 201-938-2310; shirleen.dorman@dowjones.com; and Kejal Vyas; 201-938-5460, kejal.vyas@dowjones.com