Skip to comments.Back to work - Alcoa kicks off earnings with a dose of reality
Posted on 01/12/2010 1:16:14 AM PST by Erik Latranyi
SAN FRANCISCO (MarketWatch) -- Alcoa Inc., as is the custom, ushered in the fourth-quarter earnings season after Monday's closing bell.
For those who like to think a big aluminum company can double as a barometer for how the rest of the earnings season is likely to go, it was an ugly start.
Yes, Alcoa /quotes/comstock/13*!aa/quotes/nls/aa (AA 17.45, +0.43, +2.53%) managed to trim its losses in the fourth quarter to a mere $277 million. And sales were up, a good sign. But after stripping out all the one-time items, the company's bottom line showed a profit of only one cent a share. Wall Street was looking for five cents. See Alcoa's results.
Down went the stock. When trading resumed after-hours, investors punished it with a 5% drop, cutting its regular session advance in half.
Apart from missing estimates, analysts were not thrilled by what appears to be Alcoa's never-ending effort to get a firm grip on costs, a campaign that cost over 21,000 jobs last year and resulted in a 52% drop in capital spending.
The slashing and burning is chilling, but understandable. Alcoa, like so many other big international companies, started 2009 in the midst of an international economic crisis with absolutely no clue when they were going to hit bottom.
(Excerpt) Read more at marketwatch.com ...
We have hit bottom and are treading water.
Expect more 4th quarter results like this to come.
‘Expect more 4th quarter results like this to come.’
In what year ?
Well for Japan Inc. it’s been 20 years of 4th quarters like this...
I think your right. Unemployment will continue to increase, but the numbers reported will be be going down, largely due to people who are just dropping off.
Real estate will be still be in a slump, likely through the rest of the year and won't increase until unemployment recovers. Estimates I've seen have placed that out for 5-6 years.
Commodity prices are increasing, largely due to the capacity and inventory being still being depleted.
The Chinese currency is likely to increase in value against the Dollar this year.
There is still a very real potential for another economic mess due to the high degree of leveraging that Private Equity has done with their portfolio firms.
All in all...treading water is as good a description as any. Unfortunately, at some point you need to actually swim to the shore.
Every time I see one of these bad news reports come along I expect the market to drop. But it doesn’t. It just keeps going up. What am I missing?
The Market is a leading indicator. The NYSE already dropped over 50% from October of 2007 to March of 2009. And NASDAQ, of course, peaked in the year 2000, and has been down ever since.
Are you expecting it to drop back to the levels of 1966-1984, with a DOW of 1000 for some reason? Why? How much more dropping is the right amount of dropping for you?
Alcoa can’t wait!