Ahead Of The Bell: Olympic Steel Estimate Cut

The $30 million charge is effectively a non-cash item, but reflects the continued deterioration in selling prices that is likely to have a greater impact on gross margins in the first quarter than she initially forecast, she said.

However, reductions in costs should lead to improved earnings, Varano said.

The analyst rates Olympic Steel "Hold" with a $16 share price target.

Bedford Heights, Ohio-based Olympic Steel said that it estimates the write-down will reduce annual operating expenses for 2009 by about $65 million compared with last year.

"We expect to generate significant cash flow from inventory reductions in the next six months to substantially reduce our outstanding debt by the end of 2009," said Michael D. Siegal, chairman and chife executive, in a statement.

In Tuesday's trading, shares of Olympic Steel tumbled $2.27, or 12.4 percent, to finish at $16.03.