Wednesday, July 14, 2010

A Look At Alcoa's Earnings: How Good Was It?

So the market rose again... 6 in a row dudes and dudettes!

  • NEW YORK ( -- Stocks surged Tuesday as investors welcomed Alcoa's better-than-expected profit report and a well-received auction of Greek debt that lifted global markets and strengthened the euro..... here

So how good was Alcoa's earnings? :D

  • Alcoa kicked off the second-quarter earnings season after the market close Monday and said that its profits came in at 13 cents a share, which beat analyst estimates by a penny. Revenue rose to US$5.2 billion, also above estimates.
    Alcoa also said global consumption of aluminum will grow this year by more than it had forecast just three months ago and its shares ran ahead 13 cents to US$11. (source:
    here )


  • "Alcoa's earnings were very, very decent, definitely beat expectations although expectations have been dramatically lowered over the previous couple of months," said Kathryn Delgreco, investment adviser at TD Waterhouse (source: here )

LOL! Quote: "although expectations have been dramatically lowered over the previous couple of months"!

Needless to say if earnings estimates were lowered, the company (or AA here) would sure to beat the estimates!

LOL! Talk about lowering the bar, eh? :P

The following is taken from Alcoa's website..

  • NEW YORK--(BUSINESS WIRE)--Alcoa (NYSE: AA) today announced second quarter 2010 income from continuing operations of $137 million or $0.13 per share compared with a first quarter 2010 loss from continuing operations of $194 million, or a loss of $0.19 per share. First quarter 2010 results included restructuring and special charges of $295 million, or $0.29 per share. The second quarter of 2009 showed a loss from continuing operations of $312 million, or $0.32 per share including restructuring charges.

    Earnings for the second quarter improved $331 million sequentially as stronger volumes, productivity improvements, favorable currency and lower energy costs more than offset slightly lower average realized metal prices which declined $22 a metric ton, to an average of $2,309 a ton in the quarter.

    The second quarter 2010 results reflect the impact of restructuring including job reductions and special items such as costs associated with the recently completed United Steelworkers contract negotiations, offset by non-cash, mark-to-market benefits on derivatives in several power contracts as well as a net discrete tax benefit. Taken together these items had a net unfavorable impact of $2 million in the quarter. First quarter 2010 results included restructuring and special charges of $295 million or $0.29 per share.

    Revenues for the quarter were $5.2 billion, a six percent increase from the first quarter of 2010 driven by a four percent increase in aluminum shipments and a one percent increase in third-party prices for alumina, partially offset by a one percent decrease in realized prices for aluminum. In many markets we saw strong revenue growth from the previous quarter with packaging (+17%), commercial transportation (+10%), building and construction (+9%), distribution (+5%), industrial gas turbines (+5%) and aerospace (+5%) realizing gains. Revenues increased 22 percent from $4.2 billion in the second quarter of 2009.

    “We improved profits and revenues and maintained our solid cash position,” said Klaus Kleinfeld, Alcoa Chairman and CEO. “The top and bottom line growth was driven by higher volumes from stronger end markets and continued gains from our productivity programs. Based on this improved end-market demand, we are raising our projection for aluminum consumption from 10 percent to 12 percent this year.

    “Prospects for Alcoa and aluminum continue to be excellent,” Kleinfeld said. “Aluminum is traditionally a backbone of growing economies and is penetrating new applications every day. Alcoa has enviable positions in bauxite, alumina and aluminum and our investments will move us further down the cost curve. Meanwhile, our mid- and downstream businesses continue to improve margins.” (source:
    here )

Going Gaga over 137 million net income?

Just for a matter of comparison, take the 'better' years in 2007 and 2006. Yeah let's compare a quarterly earnings of 137 million versus what Alcoa was making in 2007.

From Google:

So in 2007 AA was earning some 2.5 Billion per year. In 2006 AA was earning 2.2 Billion per year.

This so-called great quarter, AA only made 137 million. I wonder how much AA could possibly make for its fy2010. ( Where's that calamari??)

( LOL! I know.. I could be beaten sen-less or is it senseless :P ... cos... the pros would call AA the 'perfect' turnaround stock which reflects the global turnaround economy. :P )

ps: pick your poison.

6 months

5 years

And last but not least the issue about Greece as per CNN article. Quote: "well-received auction of Greek debt that lifted global markets and strengthened the euro"

A well-received auction??

Waka! Waka! :P

On ZH: After Chickening Out Of 1 Year Bills, Greece Sells €1.625 Bn 6 Month Bills To Yield 4.65%

  • Greece, which had previously decided against auctioning off 1 Year Bills for fear of lack of interest, managed to place €1.625 in 6 month bills in which local institutions purchased the bulk of the auction as foreign interest was muted. According to the PDMA who apparently still tracks the charade of ECB bailed out Greek banks recycling ECB money to then buy sovereign debt, the auction produced a yield of 4.65 percent for 26-week T-bills, up from 4.55 percent in a previous April 13 auction. The bid-cover ratio was 3.64 versus 7.67 in the previous auction.

Hmm... a well received auction. LOL! :D

Don't you love the stock markets!