Goodyear Spoils Share Price with Warning

NEW YORK (TheStreet) -- It's tough to avoid the blown-tire metaphors with this one. Goodyear(GT Quote) shares deflated by as much as 25% Wednesday in frantic trading as investors reacted viciously to what amounted to a profit warning even as the company otherwise appeared to report decent third-quarter results.

On its conference call to discuss the quarter with analysts, Goodyear managers said they now expect fourth-quarter "segment operating income" to decline by $75 million to $125 million when compared with the third period, according to one person who listened on the call. All of that weakness will come in North America, Goodyear said. The Akron, Ohio, rubber concern expects operating income to remain flat sequentially in its international segment.

Judging by the fury with which investors discarded Goodyear stock Wednesday, the sequential falloff took many on Wall Street by total surprise, with analysts scurrying away after the call to revise their profit expectations for the coming quarter, and possibly beyond.

By midday Wednesday, Goodyear's stock price had plunged 20%, or $3.39, to $13.35. Volume reached 24 million shares, almost five times the daily average turnover in the name.

The guidance was in marked contrast to the company's tenor in its third-quarter earnings report. Indeed, the results didn't appear to be that bad, especially as Goodyear was coming off six trying months when it hemorrhaged more than half a billion dollars.

Excluding charges, the company said its per-share earnings came to 45 cents, beating analysts' expectations of 40 cents. Revenue slipped 4.4% to $5.2 billion, easily besting the Wall Street consensus target of $4.26 billion.