GT - The Goodyear Tire & Rubber Company (NYSE Stock)

[BadThad]

Huge drop of over 26% today on earnings report. Could be a great bounce play off the over-sold condition.

The Goodyear Tire & Rubber Company - Google Finance

Current stock price: $12.20

[BadThad]

3rd qrt earnings:

Goodyear Reports Improved Third Quarter Earnings; Company Sees Opportunities as Markets Recover
8:00a ET October 28, 2009 (PR NewsWire)
-- Sales of $4.4 billion, up 11% from second quarter
-- Segment Operating Income of $275 million, up from prior year and second
quarter
-- Inventories reduced by more than $1 billion from year-end 2008
-- Cash and liquidity improve on continued positive cash flow
-- Year-to-date cost savings total $540 million

-- 57 new product launches in first nine months surpass full-year 2009
target




The Goodyear Tire & Rubber Company (NYSE: GT) today reported improved third quarter earnings in 2009 and discussed opportunities available to it as markets recover.

"The strength of our brands and steady stream of new and innovative tires such as our branded fuel-efficient tires provided marketplace momentum and led a strong third quarter performance," said Robert J. Keegan, chairman and chief executive officer.

"The success of our Top Line, Cost and Cash actions together with improving market conditions and lower raw material costs drove improved third quarter earnings compared to both last year and to the second quarter," he said.

"We are pleased that our results for the quarter were in line with our original operating plan despite more difficult conditions than we had expected at the beginning of the year," Keegan added.

Goodyear said it anticipates year-over-year global industry growth in 2010, especially in markets for tires featuring high-value-added features, larger rim diameters and fuel-efficient technology. The company's industry-leading new product engine, advantaged supply chain and reduced cost structure position it well to capitalize on these market opportunities.

Additionally, the company's strength in high-growth markets of the world in Asia, Latin America and Eastern Europe will allow it to leverage its advantages in these markets and capture a significant portion of that growth potential.

Third Quarter Results

The company's third quarter 2009 sales were $4.4 billion, down 15 percent from 2008's third quarter. Sales were up 11 percent from 2009's second quarter.

Third quarter 2009 sales reflect the $276 million impact of a 7 percent decline in tire unit volume due to lower industry demand as well as a $279 million reduction in sales in other tire-related businesses, primarily third-party chemical sales by North American Tire. Unfavorable foreign currency translation further reduced sales by $159 million.

Goodyear successfully launched 15 new products in the quarter, in addition to the 42 launched in the first half. The company has exceeded its goal of more than 50 new product launches during 2009.

The company had segment operating income of $275 million in the third quarter of 2009, up from $266 million in the 2008 third quarter and $24 million in 2009's second quarter.

Compared to the prior year, third quarter 2009 segment operating income reflects continued weak industry demand, which resulted in a negative volume impact of $64 million and under-absorbed fixed costs of approximately $107 million. The 2009 quarter benefited from $207 million in lower raw material costs.

Goodyear made additional progress during the third quarter on its Four-Point Cost Savings Plan. The company achieved $195 million in new savings during the third quarter, for a total of $540 million in the first nine months of 2009.

During the third quarter of 2009, the company reduced its global work force by 300 positions, adding to approximately 5,500 first half reductions. The company's full-year target was a reduction of 5,000 positions.

Third quarter 2009 Goodyear net income was $72 million (30 cents per share), up from $31 million (13 cents per share) in 2008's third quarter. The company had net losses of $221 million (92 cents per share) in the second quarter of 2009 and $333 million ($1.38 per share) in the 2009 first quarter. All per share amounts are diluted.

The 2009 third quarter was impacted by charges of $29 million (12 cents per share) due to rationalizations, asset write-offs and accelerated depreciation; a non-cash loss of $18 million (8 cents per share) on the liquidation of a subsidiary in Guatemala; a charge of $9 million (4 cents per share) to correct first-half earnings attributable to minority shareholders; expenses of $5 million (2 cents per share) related to the company's new USW labor contract; net tax-related benefits of $22 million (8 cents per share), and a gain on asset sales of $6 million (3 cents per share). All amounts are after taxes and minority interest.

See the table at the end of this release for a list of significant items impacting the 2009 and 2008 third quarters.

Positive cash flow and reduced working capital requirements have combined to improve Goodyear's cash and liquidity position. As part of its supply chain initiative, inventory levels are more than $1 billion below the year-end 2008 level.

Business Segment Results

See the note at the end of this release for further explanation and a segment operating income reconciliation table.


North American Tire Third Quarter Nine Months
(in millions) 2009 2008 2009 2008

Tire Units 17.1 18.1 45.8 54.2
Sales $1,862 $2,185 $5,093 $6,312
Segment Operating Income (Loss) 2 (19) (278) 37
Segment Operating Margin 0.1% (0.9)% (5.5)% 0.6%




North American Tire's third quarter 2009 sales declined 15 percent from last year, reflecting lower sales in other tire-related businesses of $234 million, primarily third-party chemical sales, reduced industry demand, and unfavorable foreign currency translation. Original equipment unit volume declined 21 percent. Replacement tire shipments were up less than 1 percent.

Third quarter 2009 segment operating income of $2 million was a $21 million improvement over the prior year. The quarter benefited from lower raw material costs of $105 million and actions to reduce costs. Lower sales and production levels drove a negative volume impact of $7 million and under-absorbed fixed costs of approximately $40 million. Operating income from other tire-related businesses declined $24 million.

Increased pension expense due to lower 2008 returns on plan assets and higher amortization of net losses more than offset savings resulting from the implementation of the Voluntary Employees' Beneficiary Association (VEBA) in the 2009 quarter.

United Steelworkers members, on September 18, ratified a new, four-year labor contract with the company. The contract enhances the competitiveness of North American Tire's USW-represented tire plants through improvements in productivity, wage and benefit savings and added flexibility. These changes, combined with savings from pre-bargain agreements, are expected to provide cost savings of approximately $555 million over the term of the agreements.


Europe, Middle East and
Africa Tire Third Quarter Nine Months
(in millions) 2009 2008 2009 2008

Tire Units 17.8 19.7 49.8 58.5
Sales $1,581 $1,936 $4,242 $5,910
Segment Operating Income 106 134 41 457
Segment Operating Margin 6.7% 6.9% 1.0% 7.7%




Europe, Middle East and Africa Tire's third quarter sales declined 18 percent from last year primarily due to lower tire unit volume, reflecting reduced industry demand, as well as unfavorable foreign currency translation. Original equipment unit volume declined 20 percent. Replacement tire shipments were down 6 percent.

Third quarter 2009 segment operating income of $106 million was impacted by lower sales and production levels, which drove a negative volume impact of $37 million and under-absorbed fixed costs of approximately $48 million. The quarter benefited from $63 million in lower raw material costs and actions to reduce costs, which offset higher manufacturing costs. Foreign currency translation also negatively impacted operating income.


Latin American Tire Third Quarter Nine Months
(in millions) 2009 2008 2009 2008

Tire Units 5.0 5.3 13.8 15.9
Sales $486 $581 $1,306 $1,683
Segment Operating Income 99 101 220 318
Segment Operating Margin 20.4% 17.4% 16.8% 18.9%




Latin American Tire's third quarter sales declined 16 percent from last year primarily due to lower tire unit volume, reflecting reduced industry demand, as well as unfavorable foreign currency translation. Original equipment unit volume declined 8 percent. Replacement tire shipments were down 7 percent.

Third quarter segment operating income was $99 million, down slightly from the 2008 quarter, reflecting lower sales and production levels, which drove a negative volume impact of $19 million and under-absorbed fixed costs of approximately $16 million. The quarter benefited from $23 million in lower raw material costs, price/mix gains of $10 million and actions to reduce costs.


Asia Pacific Tire Third Quarter Nine Months
(in millions) 2009 2008 2009 2008

Tire Units 5.1 5.1 14.0 15.4
Sales $456 $470 $1,223 $1,448
Segment Operating Income 68 50 140 151
Segment Operating Margin 14.9% 10.6% 11.4% 10.4%




Asia Pacific Tire's third quarter sales declined 3 percent from last year due to unfavorable foreign currency translation and lower tire unit volume, reflecting reduced industry demand. Original equipment unit volume increased 4 percent. Replacement tire shipments were down 6 percent. Improved price/mix partially offset the lower volume.

Third quarter segment operating income of $68 million increased 36 percent over last year and was a record for any quarter. This was primarily due to lower raw material costs of $16 million, price/mix improvements of $6 million and actions to reduce costs. Foreign currency translation also negatively impacted operating income.

Year-to-Date Results

Goodyear's sales for 2009's first nine months were $11.9 billion, down from $15.4 billion in the 2008 period. Sales reflect the $1.7 billion impact of a 14 percent decline in tire unit volume due to lower global industry demand, as well as an $828 million reduction in sales in other tire-related businesses, primarily third-party chemical sales by North American Tire. Unfavorable foreign currency translation reduced sales by $1 billion.

The company's year-to-date segment operating income was $123 million compared to $963 million last year.

Segment operating income for 2009's first nine months reflects continued weak industry demand that resulted in a negative volume impact of $332 million, under-absorbed fixed costs of approximately $514 million and reduced operating income from other tire-related businesses.

Improved price/mix of $275 million more than offset increased raw material costs of $243 million in the first nine months of 2009.

The year-to-date Goodyear net loss of $482 million ($2.00 per share) compares to Goodyear net income of $253 million ($1.04 per share) in 2008's first nine months. All per share amounts are diluted.

[BadThad]

Roll the dice time once again, I'm in at 12.65!

[BadThad]

$13.36!

[BadThad]

S&P Hold:

S&P REITERATES HOLD OPINION ON SHARES OF GOODYEAR
(Standard & Poor's)
GT posts adjusted Q3 EPS at $0.45 vs. $0.43, below our $0.62 forecast. We believe GT shares are down on concerns about expected sharp drop in North American operating profits in Q4. We expect unabsorbed overhead costs, especially in commercial vehicles in several regions, to weigh on results in the near term. However, capacity reductions should position the company for improved operating leverage and profits when volume rises. We expect a return to profitability in '10 on greater passenger tire demand and we would continue to hold GT shares.

Sorry Mr.Poors, I sold half my shares for a nice profit. LOLOLOL

[BadThad]

Sold the rest of my shares, this market is horrible today! Take profit when it comes!

[BadThad]

Dipping down again this morning, I'm back in at 12.40!

[BadThad]

More insight to the drop:

Goodyear's little bomb
4:47p ET October 28, 2009 (MarketWatch)
SAN FRANCISCO (MarketWatch) -- Investors turned on Goodyear Tire & Rubber Wednesday, mangling the stock for refusing to pretend it's on a smooth path back to higher profits.

Goodyear trotted out some pretty good numbers for the third quarter. Excluding one-time items, it earned 45 cents a share. Analysts were looking for 36 cents. Net income more than doubled from a year ago. Even revenue, which has been suspiciously "lite" for a lot of companies this quarter, was better than expected. See full story.

But Goodyear shares fell as much as 24%, landing it among the stock market's biggest percentage decliners for much of the day.

What triggered the avalanche? A chilling fourth-quarter outlook.

Goodyear execs warned their North American operating income is set to plunge from $2 million this past quarter to a loss in the final three months of the year that could go as deep as $123 million.

Their explanation? Fixed costs, material expenses and the usual seasonal factors. Fixed costs and seasonal factors should not come as a surprise to anyone. That leaves material costs, and those track futures markets.

So this comes as a bit of a shock. It interrupts the drumbeat of better times ahead heard throughout this latest earnings season. All signs have been pointing to a recovery across almost all sectors. Tires are certainly at the heart of this, literally carrying the loads of the mining, construction and transportation sectors.

Perhaps just as shocking is how analysts didn't see it coming. Goodyear is, after all, the nation's biggest tire maker.

There are undoubtedly a lot of issues in this story peculiar to Goodyear, but it raises a disturbing question: Are there other companies -- other industries -- out there likely to drop similar bombs on the market, just as investors were starting to get comfortable with the Dow being back up around 10,000?

The answer is probably "yes." That puts a premium on healthy skepticism. While this latest earnings season has generally blown away analysts' low expectations, there's reason to suspect they may now be ratcheting expectations too high for the next round. That would set up a "miss" on the research side of the game that's every bit as inexcusable as an earnings "miss" by companies themselves.

IMO, even though the outlook is not great for the next qtr, GT is a very good company and over the next year or so, they will be fine.

[BadThad]

Picked up more at $11.90.

BOUNCE BABY BOUNCE!

[BadThad]

$12.32.....I'm in the green again!