Alcoa Shares Down Sharply on Miss - TheStreet

(Updated to reflect stock-price movement.)



) -- The selloff in


(AA) - Get Report

shares accelerated Tuesday afternoon, weighing down the broader equities markets, after the aluminum giant missed Wall Street expectations when it reported results after the bell Monday.

Alcoa shares closed Tuesday's session down $1.93, or 11.1%, to $15.52, on volume of nearly 155.3 million shares, more than five times the three-month average daily average turnover. The stock had touched a 52-week high of $17.60 intraday Monday.

The first Dow component to report earnings each quarter, Alcoa said it eked out an adjusted per-share profit of one cent, which excludes a restructuring charge of 28 cents a share. Analysts were expecting 6 cents a share, according to a survey by Thompson Reuters.

Though aluminum prices have

spiked in recent months

, analysts were expecting that rise to help the company's results to a greater degree. "We remain concerned that the company's primary aluminum business exhibits less leverage to the metal than in the past," wrote Anthony Rizzuto, an analyst at Dahlman Rose in New York, in a research note Tuesday morning.

Still, Alcoa's earnings were better than the fourth quarter of 2008, when the company lost $929 million, or $1.16 a share.

Revenue in the quarter amounted to $5.4 billion, down slightly from the $5.7 billion top line posted a year ago, but surpassing the consensus forecast of $4.82 billion.

Including all the special items, Alcoa lost $277 million, or 28 cents a share, in the fourth period.

Alcoa's results -- along with a strengthening U.S. dollar, which makes commodities less appealing to investors -- appeared to put pressure on cyclical and commodities-related stocks across the board Tuesday.

Miners such as

Freeport McMoRan

(FCX) - Get Report


BHP Billiton

(BHP) - Get Report

were down more than 3.5% each, equipment makers


(CAT) - Get Report



(DE) - Get Report

declined 3% and 4%.3 respectively, and fertilizer producers





(MOS) - Get Report

gave up more than 4% and 5%, respectively.

Alcoa's prepared CEO statement Monday contained the predicable bright side: "This was a tough year for the aluminum industry -- a price crash, demand destruction, and credit crunch. Yet, today Alcoa is stronger than when the year started," Alcoa boss Klaus Kleinfeld said in the company's press release.

As proof of that stronger position, Kleinfeld cited stronger cash reserves and severe cost cuts -- Alcoa laid off some 13,000 workers, slashed overhead by $412 million and reduced capital spending by 50% in 2009.

Indeed, Alcoa's finance chief, Charles McLane, said in a post-earnings conference call that Alcoa preserved more cash than perhaps many observers were expecting, leading to the worse-than-anticipated profit.

Among Alcoa's major business units, the "primary metals" segment saw sales rise to $1.9 billion from $1.58 billion in the year-ago period. Alcoa sold aluminum at an average price of $2,155 per metric ton during the just-ended fourth quarter. A year earlier, the average selling price was $2,125. Prices then cratered, dropping to between $1,500 and $1,700 in the first and second quarters of 2009 before going on a prolonged run as the year drew to a close.

In the fourth quarter, a weakening U.S. dollar clipped profits in its primary metals segment, Alcoa said. The European Commission also dinged the company recently -- to the tune of about $250 million -- by ruling that Alcoa had to pay higher electricty tariffs on its aluminum smelters in Italy.

Elsewhere, the company's aerospace, construction and gas-turbine businesses continued to erode. Sales in the engineered-products segment, which includes aerospace and construction, dropped to $1.1 billion from $1.4 billion a year ago. Alcoa, a longtime


(BA) - Get Report

supplier, will ship parts to the aircraft maker for use in the 787 Dreamliner.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.