Alcoa Enters the Rust Business (AA)

Alcoa Inc. (NYSE: AA) posted earnings excludling one-time items of -$0.28 EPS on revenue of $5.69 billion.  This compares with First Call estimates of -$0.11 EPS on $5.18 billion in revenues.  Some of the metrics really outline the woes.

The company has $762 million cash on hand and generated a total loss ofwell in excess of $1.00 per share if you factor in layoffs andcharges.  The company noted that over the last 5 months it has seen a56% price decline and sharp drop in orders.

Alcoa has just one small problem here.  It cannot control aluminumprices and ultimately cannot control orders.  While prices might not be falling further, thecompany is expected to have to trim production if there is not ameaningful price improvement.   What does a cut in production mean for jobs?  Nothing good, which we have already heard about from the company.

There is also no formal guidance.  It is very possible that it willnot give as detailed guidance as it has in the past.  In this market,would you?

Alcoa shares closed down almost 7% at $10.06 today, and its 52-week trading range is $6.80 to $44.77.  Tough times indeed.

Jon C. Ogg
January 12, 2009