alcoa bad news watch dow tonight
Alcoa drops nearly 8% after market earning result, might not be good for our resources either. Let see how Dow hold up tonight.
Alcoa net rises 86% but Street sought more
PrintE-mailDisable live quotesRSSDigg itDel.icio.usBy Laura Mandaro, MarketWatch Last Update: 5:21 PM ET Oct 10, 2006
SAN FRANCISCO (MarketWatch) -- Alcoa Inc. late Tuesday said that profit and revenue made lower than expected leaps in the third quarter, as a drop-off in aluminum prices started to chip away at earnings. Net income for the three months ending in September surged 86% to $537 million, or 61 cents a share, including a one-cent loss from discontinued operations. Alcoa's earnings per share fell short of analysts' target of 77 cents a share. Revenue climbed 19% to $7.6 billion but also missed the $7.75 billion expected by analysts. Alcoa (AA : alcoa inc com News , chart, profile, more Last: 28.29+0.30+1.07%
6:40pm 10/10/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: AA28.29, +0.30, +1.1%) shares fell 6.7% to $26.40 in extended trading after rising 1.1% to $28.29 during regular session. Despite the double-digit growth rates, the world's largest aluminum producer said that a drop in metals prices had started to dampen results from the preceding quarter. But the maker of Reynolds Wrap also announced that it expects a drop in plastics prices to help the consumer-packaging division in the fourth quarter. Third quarter sales fell 2% from the second quarter as metal prices fell 6%. Net income declined 28% from the second quarter. Alcoa's third-quarter earnings herald the start of the quarterly reporting season and can act as a bellwether for capital spending. Market watchers have been keen to hear what the raw-materials producer would say about demand from its clients across the industrial spectrum, particularly jetmakers, automakers and the construction industry. Alcoa Chief Executive Alain Belda said that "while the North American automotive and the housing-construction markets are softening, most of our downstream markets continue to be strong -- especially aerospace and commercial transportation." The comments track prior announcements by big users of metals. DaimlerChrysler AG's (DCX : daimlerchrysler ag ord News , chart, profile, more Last: 49.99-0.40-0.79%
6:42pm 10/10/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: DCX49.99, -0.40, -0.8%) Chrysler unit last month announced significant production cuts for the third quarter, while Ford Motor Co. (F : Ford Motor Company News , chart, profile, more Last: 8.19-0.01-0.12%
6:43pm 10/10/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: F8.19, -0.01, -0.1%) is slashing North American output in the fourth quarter by 21% as it works down a glut of sport utility vehicles. But aircraft maker Boeing Co. (BA : Boeing Co. News , chart, profile, more Last: 82.13-0.52-0.63%
6:40pm 10/10/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: BA82.13, -0.52, -0.6%) reported several large orders for the period. Strong demand in the aerospace and commercial-vehicle markets, plus price increases, helped Alcoa 's engineered solutions profit post a 121% gain from the prior year. Commodities cycle Results from the Pittsburgh-based aluminum giant also give markets a first glimpse of how waning prices in some commodities are playing out on the income statements of their producers. Alcoa said that operating income from its primary metals segment, its largest division, more than doubled from the year-ago quarter to $346 million, but fell 29% from the second quarter because of lower metals prices and high materials costs. Plus, the company added that it expects its packaging and consumer sector to get some relief from lower raw-material costs. That division's profit fell by $4 million from the year-ago quarter due to higher costs from resin, the key component of plastics. "It is anticipated that the lagged recovery of the third-quarter, raw-material cost increases will benefit the fourth quarter," according to Alcoa. Though aluminum prices still easily top year-ago levels, they have dropped sharply from the spring. Spot aluminum prices fell 6% to about $1.13 a pound in the third quarter from an average $1.20 in the second, Citigroup said. But they're up 36% from the third quarter of last year. Analysts expect further price declines into next year, with Morgan Stanley forecasting a 9% drop next year. Lower prices should eventually catch up with Alcoa. Over the past two months, Wall Street analysts have been gradually notching down their 2006 and 2007 profit estimates for the company as well as other aluminum producers because of a gloomier outlook for metals prices. Still, as of Tuesday morning they expected that Alcoa's fourth-quarter profits more than doubling again to 75 cents a share from 35 cents a year ago, according to Thomson First Call. Power play Costs and access to inexpensive energy has been another concern for North American aluminum makers like Alcoa and Canadian rival Alcan Inc. (AL : Alcan Inc News , chart, profile, more Last: 40.67+0.13+0.32%
6:40pm 10/10/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: AL40.67, +0.13, +0.3%) (CA:AL: news, chart, profile) . On Monday, two Russian aluminum companies announced a three-way merger worth an estimated $25 billion to $30 billion, according to Dealogic. It would create the world's largest producer of aluminum, nudging out Alcoa for that top spot, and one that would benefit from access to Siberia's inexpensive hydropower. See full story. The deal is significant for Alcoa, said Deutsche Bank analyst David Martin. "It creates another leading producer," and one that has a cheap source of power.
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