Wednesday, October 7, 2009

Alcoa Posts Surprise Profit on Cost Cuts

By KATHY SHWIFF (Wall Street Journal)

Alcoa Inc. posted a third-quarter profit–after three quarterly losses in a row–surprising Wall Street, which had expected another loss, and getting the third-quarter earnings season off to a good start. Chief Executive Klaus Kleinfeld said cost-cutting and other steps the aluminum giant took earlier this year had a strong effect on the cash position and profit. "Despite unfavorable currency and energy headwinds, our performance this quarter indicates that Alcoa is weathering the economic storm and is in excellent shape to benefit when the market recovers," he added. Alcoa, the first blue-chip company to release quarterly results, said it sees signs that key markets are stabilizing and predicted global aluminum consumption would increase 11% in the second half of 2009. The company has cut output and costs during a brutal period for the aluminum industry, saving $1.61 billion in procurement costs and $375 million in overhead so far this year. Reductions in working capital generated $780 million in cash. Alcoa said it finished the quarter with $1.1 billion of cash on hand, up 29% from the end of the second quarter.

The company also has been investing in areas expected to recover early from the economic downturn, ranging from a construction-products factory in Russia to a small fasteners business in Morocco to sections of the oil-and-gas industry. Alcoa reported a profit of $77 million, or 8 cents a share, down from a year-earlier profit of $268 million, or 33 cents a share. The latest results included 3 cents a share in restructuring and other charges. Prior-year results included a 4-cent charge related to the curtailment of a smelter in Texas. Excluding items, earnings were 4 cents a share in the latest period. Revenue dropped 34% to $4.62 billion. Analysts' estimates were for a loss of 9 cents a share on revenue of $4.55 billion, according to a poll by Thomson Reuters. Alcoa's average realized aluminum price during the third quarter was $1,972 a metric ton, up 18% from the previous quarter. Shipments declined 8.3%. The company posted profits in all segments of its business, except primary metals. Alcoa's shares closed Wednesday up 2.2% at $14.20; trading was halted after hours. The stock, which has been rising recently on optimism about its results, has almost tripled from a 21-year low in March but is still down one-quarter from a year ago.

Russia lauds birthday strongman Putin

By Anna Smolchenko (AFP)

MOSCOW — An ode was published in his honour. A painting was given to him by the president. A novelist wished him a long life. And the Orthodox Church praised him for his tact. There was no shortage of leading Russians Wednesday queuing up to congratulate their favourite politician Vladimir Putin on his 57th birthday, with his critics still sidelined after 10 years in power. "Fifty-seven years is an average age," mused leading novelist Valentin Rasputin at a meeting Putin attended with some of Russia's best known writers.

"Today people live for a long time and statesmen -- the more they work... the more energies remain for the rest of the life," Rasputin was quoted as saying by Russia's official news agency ITAR-TASS. "God willing you manage the same. We wish everything goes well for you. And what is well? That means well for the country, well for us." Analysts say Putin, who served eight years as Russia's second post-Soviet president and has now settled comfortably into the role of prime minister, remains Russia's favourite politician. He is keeping the world in suspense over whether he is plotting a return to the Kremlin but if he wins the 2012 polls he is likely to stay in power for another 12 years, until he turns 72.

A Russian newspaper, the Nezavisimaya Gazeta, carried an ode in honour of Putin on its front page that stepped a fine line between eulogy and irony. "I congratulate you, comrade Putin/ And may God give you another 120 years," it said. Patriarch Kirill, head of the Russian Orthodox Church, extolled what he described as Putin's openness, wisdom and tact.

"With inherent tact you persistently defend the interests of the state, confirming the authority of power far outside the country's borders," he said in a statement posted on the Church's website. Putin's protege and now president, Dmitry Medvedev, also took the time to meet with Putin and presented him with a painting, the Russian television said. Earlier Wednesday, Putin met with some of Russia's leading writers at the Pushkin Art Museum in Moscow, pledging more financial aide for them in an apparent attempt to win the intellectuals' support. But several top writers, including author Dmitry Bykov and prize-winning novelist Lyudmila Ulitskaya, said they had declined invitations to meet Putin.

"I am not attending," Ulitskaya told AFP.

"I am leaving today on my holidays and I bought my tickets in advance," she added without giving further details. Later Wednesday, Bykov attended an event to mark the memory of Anna Politkovskaya, an anti-Kremlin journalist killed three years ago. Neither the Kremlin nor Putin made any statements regarding her unsolved murder in 2006.
Bykov told Moscow Echo radio that he would have considered attending, but Putin's birthday was a bad choice for the event.

"The fact it's on his birthday turns it into protocol. My upbringing does not allow me to see someone on his birthday and then talk about problems with him, to express criticism." Putin's spokesman Dmitry Peskov confirmed that several writers were unable to come but denied this was because of any objections towards the prime minister. Putin loses no opportunity to stress that he is in good physical health -- be it by posturing with a naked torso in the Russian wilderness or diving to the bottom of the world's deepest lake. Moskovsky Komsomolets, a newspaper seen as being close to the Kremlin, said Medvedev's main problem was the elite didn't consider him to be a decision maker. "At a time when the president makes his speeches, the prime minister makes all the real decisions," it said. "That's the main internal political challenge faced today by Dmitry Medvedev."

Dell to lay off 905 in plant closure

By David Goldman, staff writer

NEW YORK ( -- Computer maker Dell announced on Wednesday that it will close a plant in Winston-Salem, N.C., and will cut 905 jobs as a result. Dell said that 600 plant workers will be laid off in November, and the remaining 305 employees will be cut by January 2010, when the plant is scheduled to close. The cuts represent about 1% of the company's 76,000 employees. "This is a difficult decision, especially for our North Carolina colleagues, but a necessary one for Dell customers and our company," said Frank Miller, vice president of Dell, in a statement. "The efforts of our team members there have been significant and we're committed to helping them through their transition."

The Winston-Salem plant was used to make desktop computers. The company said the plant closing is part of a larger effort to simplify Dell's operations and improve its efficiency. Dell began cutting back staff and closing plants in January. In late September, Dell bought tech services provider Perot Systems (PER) for $3.9 billion as part of an effort to seek an additional source of revenue. Until the Perot deal, Dell has strictly been a hardware company, selling PCs and servers to its customers. But businesses have relied less on hardware recently, buying fewer computers and outsourcing their servers during the recent economic recession. Consumers also made fewer desktop and laptop purchases during the downturn. That cut into Dell's sales and profit in recent quarters and sent the stock down to an 11-year low in March before rebounding in recent months. Shares of Dell (DELL, Fortune 500) fell more than 1% in afternoon trading.