NEW YORK (AP) â¿¿ Shares of Federal-Mogul Corp. continued to climb Thursday as Wall Street was encouraged by the auto parts supplier's first-quarter results.
THE SPARK: The Southfield, Mich., company reported its quarterly results Wednesday morning. Federal-Mogul said it lost $34 million, or 34 cents per share, in the most recent quarter after reporting net income of $32 million, or 32 cents per share, a year ago. Revenue fell 2 percent to $1.7 billion.
Analysts were expecting a loss of 21 cents per share and $1.75 billion in revenue, according to FactSet.
Federal-Mogul said its results were affected by a decrease in the production of commercial vehicles worldwide and reduced production of small vehicles in Europe. It reported $8 million in restructuring costs during the quarter and expects about $80 million in total restructuring items for the year.THE BIG PICTURE: Federal-Mogul makes powertrain and safety systems. In March the company sold its Sintertech SAS business to a company controlled by French industrialist Thierry Morin. The business develops, produces and sells powdered metal components for engines and gearboxes for use in vehicles and other industrial equipment, along with powdered metal filtration materials mainly used in the chemical industry, Federal-Mogul said. Federal-Mogul said it didn't consider the business to be one of its core operations. The company said in July that it would close or downsize some facilities in North America and said in February that it would make other moves, including the closing or downsizing of manufacturing plants in Western Europe. Those changes are being made in reaction to weaker demand in Europe. THE ANALYSIS: Goldman Sachs analyst Patrick Archambault upgraded the shares to "Neutral" from "Sell," saying the results were better than expected and the price of Federal-Mogul shares has declined to a more reasonable level. Archambault raised his six-month price target to $6 per share from $5. He had previously placed Federal-Mogul on a list of stocks carrying strong negative recommendations.