Alcoa Slips 16% in Q4

Elena
10 Jan, 2006
New York City

Most Asian-Pacific benchmarks closed lower on profit taking, led by the Nikkei, down 1.9% to 16,124.35, followed by South Korea, falling by 0.9% and Taiwan, down 0.5%. Shanghai Composite and Hong Hong''s Hang Seng gained 0.4% each. European stocks traded lower at mid-day on gains consolidation. Aluminum giant Alcoa posted disappointing Q4 earnings of 24 cents a share vs. 39 cents a year ago, or a 16% drop, missing estimates of 37 cents a share.

U.S. MARKET AVERAGES

U.S. stock futures pointed to a weak opening on gains consolidation, following the Dow’s Monday close at four-and-a-half-years peak of 11,011, led by General Motors after a brokerage upgrade. Alcoa’s lower-than-expected Q4 earnings also weighed on sentiment.

After the closing bell Monday Alcoa Inc, the world''s biggest aluminum producer, kicked off the fourth-quarter earnings season. The company’s quarterly results disappointed and the stock slipped 4.7% in Frankfurt trade after it reported a 16% Q4 earnings drop to 24 cents a share vs. 39 cents a year ago, missing estimates of 37 cents a share. The Dow component posted a sharply lower fourth-quarter profit due to a long list of production outages, strikes and restructuring costs.

Another Dow component, Home Depot Inc agreed to buy Hughes SupplyInc., a distributor of construction, repair and maintenance products, for $3.47 billion, or $46.50 a share, assuming $285 million in debt.

Credit Suisse First Boston downgraded the multi-industry sector to market weight from overweight following an 81% share price rise since early 2003, and downgraded United Technologies Corp. to neutral from outperform. CSFB downgraded United Technologies, saying there's higher upside in other outperform-rated names.

S&P 500 futures dropped 3.9 points at 1,291.0 and Nasdaq 100 futures fell 7.5 points at 1,747.0.

INTERNATIONAL MARKETS NEWS

Most Asian-Pacific benchmarks lost ground Tuesday, posting heavy losses on worries that recent rally may have gone too far, especially currency-rate gains with exporter issues benefiting from them. The decliners were led by The Nikkei which tumbled 1.9% to 16,124.35, followed by South Korea’s Kospi, down 0.9%, and Taiwan’s Weighted index, down 0.5%. China’s Shanghai Composite and Hong Kong’s Hang Seng reversed from recent weakness to finish higher by 0.4% each.

European stocks were weak at mid-day dealings with investors selling sensitive stocks like insurers after the Dow Jones Industrial average crossed the 11,000 level for he first time in four years and a half. The German DAX 30 lost 0.3%, the French CAC 40 slipped 0.3%, and London’s FTSE 100 declined 0.2%.

OIL, METALS, CURRENCIES

Crude oil prices advanced on worries that giant oil-producer Iran will be pressured by Western countries in connection with nuclear fuel. Light sweet crude for February delivery gained 50 cents to $64 a barrel. Gasoline slightly fell to $1.7665 a gallon. Heating oil traded up to $1.7715. Natural gas added 3 cents to $9.387 per 1,000 cubic feet. London Brent rose 49 cents to $62.50.

European gold climbed on inflation worries and weaker dollar against the yen. In London gold rose to $545.25 per troy ounce from $541.50. In Zurich the precious metal advanced to $546.78 from $541.55. In Hong Kong gold climbed $4.50 to close at $546.50.

The U.S. dollar traded mixed against major currencies. The euro was quoted at $1.2075, down from $1.2083. The dollar bought 114.25 yen, down from 114.35. The British pound traded at $1.7664, down from $1.7645.

EARNINGS NEWS

SUPERVALU INC. ((SVU)), grocery company, reported record Q3 results Net sales amounted to $4.7 billion up from $4.6 billion last year, earnings per share were 53 cents compared to 46 cents in the year-ago period. Q3 results include net after tax charges of approximately 4 cents per share related to growth initiatives and costs related to terminated acquisition activities. Last year''s Q3 results include net after tax restructure and other charges of 9 cents per share primarily related to increased liabilities associated with employee benefit related costs from previously exited distribution facilities, as well as changes in estimates on exited real estate. Q3 retail net sales were $2.5 billion, a 1.9 % increase in comparison with last year''s Q3. Comparable store sales growth for the quarter was negative 0.9 %, with positive comparable store sales at company-operated Save-A-Lot stores. Reported retail operating earnings for Q3 were a record $104.5 million compared to $101.3 million in last year''s Q3.

Tiffany & Co ((TIF)), jeweler, reported that its same-store sales for the holiday period rose 6% in the U.S. and 7% in Japan. Net sales for the same period advanced 6%. On a constant currency basis, net sales increased 9% and worldwide same-store sales increased 6%. The company expects its earnings for 2005 to be in the range of $1.60 to $1.62 a share, slightly missing Analysts’ estimate of $1.64 a share for the year.

Icon ((ICLR)), clinical research company, reported that Q2 profit advanced 20.5% to 49 cents a share on an 11% increase in net revenue. The company announced that it raised its Q2 operating profit margin to 10.2% from 8.8% in the comparable period last year.