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Ferro Shares Tumble On 4Q Loss, Weak 2012 Guidance

NEW YORK (AP) â¿¿ Shares of Ferro Corp. tumbled Wednesday after the materials manufacturing company said it posted a $28.8 million fourth-quarter loss and issued a lower-than-expected 2012 profit guidance.

THE SPARK: Cleveland-based Ferro's loss amounted to 33 cents per share and compared with a profit of $1.8 million, or 2 cents per share, in the same quarter a year earlier.

Excluding one-time items, the company said it posted an adjusted profit of 8 cents per share for the three months ended in December. Sales fell 18 percent to $443 million.

The results came up short of Wall Street predictions. Analysts, on average, expected an adjusted loss of 4 cents per share on $467.3 million in revenue, according to a FactSet poll.

THE BIG PICTURE: Ferro attributed the drop in overall sales to lower-than-expected contributions from its electronic materials business.

A drop in demand for conductive pastes used in solar cells and metal powders used in a variety of electronic products lowered that business' sales by $103 million. Excluding electronic materials, sales rose 2.4 percent, Ferro said.

Meanwhile, sales rose at the company's performance coatings, polymer additives, specialty plastics and pharmaceuticals businesses.

Ferro also warned that demand for conductive pastes remains weak, because of low demand from solar cell makers and high inventories of completed solar power modules, especially in Europe.

The company said it expects to post an adjusted 1012 profit of 40 cents to 65 cents per share, well below the average analysts' estimate of 69 cents per share.

Ferro also said it expects its 2012 sales to be relatively flat compared with the previous year, after adjusting for the expected negative effects of exchange rates. Analysts were forecasting sales of $2.16 billion, growth of less than 1 percent over 2011 sales.

THE ANALYSIS: KeyBanc analyst Michael Sison backed his "Hold" rating for Ferro in a Wednesday note to investors, saying that the sales increase, excluding the electronic materials business, is an "encouraging sign" that the rest of the company may be recovering.

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