Alcoa's Profit Disappoints, Knocking Down Its Shares

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Aluminum giant Alcoa (AA) on Monday posted a narrower fourth-quarter net loss, helped by costs cuts and higher aluminum prices, but its earnings fell short of Wall Street's forecast. For the three months ended Dec. 31, Pittsburgh-based Alcoa reported a net loss of $277 million, or 28 cents a share, versus a year-ago loss of $1.19 billion, or $1.49.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%%Excluding restructuring charges and other items, the component of the Dow Jones Industrial Average ($INDU) would have reported earnings of 1 cent a share. On that basis, analysts were looking for earnings of 6 cents a share, according to Thomson Reuters.

Revenue fell 4% to $5.43 billion from $5.69 billion a year ago, but surpassed the Street's view for $4.82 billion.

Shares in Alcoa sold off sharply in extended-hours trading after finishing the regular session up 2.5%, or 43 cents, at $17.45.

The earnings miss could trigger a wider sell-off on Tuesday because Alcoa and other materials sector stocks have benefited from the expectations of a global economic recovery. Indeed, basic materials have been the best-performing market sector over the last month, according to Capital IQ, helped by a nearly 30% gain in Alcoa's stock during that period. Since the market's March low, shares in Alcoa have more than tripled versus a 70% gain for the S&P 500 ($INX).

For the full year, Alcoa reported a net loss of $1.15 billion, or $1.23 a share, versus a year-ago loss of $74 million, or 10 cents. Sales fell to $18.44 billion from $26.9 billion in 2008.
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