Allegheny Warning Melts Metal (ATI, X, TIE)

By Douglas A. McIntyre Published Oct 11, 4:56PM EDT

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Allegheny Technologies Incorporated (NYSE:ATI) said today that it expects full-year 2007 earnings per share to be in the range of $7.00 to $7.25 per diluted share in anticipation of lower second half 2007 earnings than previously expected. ATI expects third quarter 2007 earnings to be in the range of $1.85 to $1.88 per diluted share and further impacts in the fourth quarter. As far as how this compares to estimates: Annual estimates are $7.95; Q3 is $1.96; and Q4 is $2.05.

Here are the two biggies, neither of which are overly comforting for serious metals bulls: Softness in demand for standard stainless sheet is continuing because of higher inventories at certain mills and depots and volatile raw material costs. In addition, a significant reduction in raw material surcharges and indexes is expected from the rapid decline in the cost of nickel, nickel-bearing scrap, and titanium scrap.

Allegheny says it sees continuing growth in demand for our high-value products from the global aerospace and defense, chemical process industry, oil and gas, and electrical energy markets. Shipments under long-term agreements in these markets should continue to grow over the next several years. There is at least one refreshing part: "We do not anticipate a significant impact from the recently announced delay in the Boeing 787 Dreamliner schedule." Allegheny also says the softness in demand for standard stainless sheet appears to be bottoming out and inventory levels at distributors are low by historic measures. Demand for these products should begin to improve in early 2008 once the high inventories at stainless mills and depots are reduced.

Shares of Allegheny closed down 4% at $106.65 in regular trading today, but shares are down another 9% at $97.00 in after hours trading. As ATI is roughly an $11 Billion market cap, this is spelling trouble elsewhere: United States Steel Corp. (NYSE:X) fell 1.3% today but shares are down 3% at $103.50 in after-hours; Titanium Metals Corp. (NYSE:TIE) fell 1.3% today but are down another 3.3% at $31.98 in after-hours.

Jon C. Ogg
October 11, 2007

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.