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Alcoa (AA) tumbled in after-hours trading Tuesday after the aluminum company posted third-quarter earnings that were short of Wall Street's expectations. The company earned $537 million, or 61 cents a share, compared with $289 million, or 33 cents a share, a year ago. Revenue increased 19% from a year ago to $7.6 billion. Analysts polled by Thomson First Call were looking for earnings of 79 cents a share on revenue of $7.68 billion. Shares were trading down $1.99, or about 7%, to $26.30.

ECC Capital (ECR) soared after the Irvine, Calif.-based REIT said Bear Stearns Residential Mortgage, a subsidiary of Bear Stearns (BSC), agreed to buy the subprime mortgage origination platform of ECC Capital's subsidiary, Encore Credit, for about $26 million in cash and the assumption of certain lease liabilities.

Encore Credit, specializing in subprime mortgage origination, will operate as a separate division of Bear Stearns Residential Mortgage. The deal is expected to close by the end of 2006; within 30 days after the close of the transaction, ECC Capital said it expects to make an initial distribution to stockholders of about 80 cents a share. Shares were climbing 26 cents, or 25%, to $1.30.

Legg Mason (LM) dropped after the Baltimore-based asset manager warned of a steep earnings shortfall, citing a weaker-than-expected showing in September. The company said it expects to make 96 cents to $1.02 a share, far shy of the $1.16-a-share Wall Street's estimate.

Legg Mason said revenue fell 1% from second-quarter levels, as the asset mix shifted toward lower revenue-generating fixed income assets. Legg Mason was also hit to the tune of 4 cents a share by what it called "unanticipated mutual fund distribution fee expenses payable by our acquired business to our principal third-party distributor that relate to prior quarters." Legg Mason bought Citigroup's asset management arm in December 2005.

Legg Mason estimates that assets under management as of Sept. 30 were $890 billion (50% fixed income, 35% equity and 15% liquidity). Assets under management at June 30 were $855 billion. The company also confirmed that its integration of the Citigroup business remains on schedule and that it continues to expect to achieve the previously announced cost savings from that integration. Shares were dropping $9.76, or 9.27%, to $95.55.

Navarre (NAVR) retreated after the New Hope, Minn.-based video game publisher said that it would take a charge of about 3 cents a share in the second quarter as a result of Tower Records' Chapter 11 bankruptcy. The Tower Records chain closed after it was bought by the Los Angeles-based Great American Group for $134.3 million. The company plans to liquidate the music retailer. An attorney for Tower Records said the company will be sold for an aggregate of $150 million, including the sale of various leases and properties, the Associated Press reported. Shares fell 25 cents, or about 6%, to $3.95.

Nobility Homes (NOBH) gained after the Ocala, Fla.-based manufactured-homes company said a special committee of its board of directors chose the investment banking firm of Savvian Advisors to assist the committee in exploring strategic alternatives for the company. Savvian Advisors is expected to begin its analysis on Wednesday. Nobility Homes said the board approved the hiring of an investment banking firm to explore available strategic alternatives primarily as a result of the increasing costs related to Sarbanes-Oxley 404 compliance and other costs of being a public company. Shares were trading up $1.16, or 4.3%, to $28.

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