<THE FOOLISH FOUR>
by Robert Sheard
LEXINGTON, KY. (July 7, 1998) -- Earnings season has begun for the Dow stocks. The company typically out with earnings first is Aluminum Co. of America <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AA)") else Response.Write("(NYSE: AA)") end if %>, and the second quarter is no different.
The aluminum company known as Alcoa posted a profit of $1.37 per share (diluted), a 12.3% gain over last year's second quarter result of $1.22 per share. According to First Call, the company was expected to earn only $1.14.
As a result of the much higher-than-expected number, Alcoa's stock jumped 4.5% early in the session, but was only able to hold on to a little more than a 1% gain at day's end. The cyclical companies like Alcoa and International Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %> have been taking it on the chin of late, so this positive earnings surprise might well be a good harbinger for the second quarter results across the Dow, especially for manufacturing companies which have been beaten down on presumed weakness in Asia.
For Alcoa, especially strong shipments in Europe made the difference in the strong earnings report. Despite a drop in aluminum prices, Alcoa was able to grow its total shipments over last year by 14%.
In other Dow news, a panel of Senate antitrust examiners is looking into the proposed AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> acquisition of Tele-Communications, Inc. 'A' <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCOMA)") else Response.Write("(Nasdaq: TCOMA)") end if %>. The merger participants are cheerleading for the deal as a move toward more competition, breaking the lock on the local phone markets held by the regional phone companies.
While not committing himself, Sen. Mike DeWine, who chairs the Judiciary antitrust, business rights and competition committee, seems very positive on the possibilities for the merged companies. AT&T top executive C. Michael Armstrong expects government approval for the deal in nine months or less.
One down, twenty-nine to go for the second-quarter earnings season. We're off to a fine start.
Current Dow Order | 1998 Dow Returns
[Robert Sheard is the author of the The Unemotional Investor (Simon & Schuster, 1998) available now at Amazon.com and your local bookseller.]
07/07/98 Close
Stock Change Last -------------------- UK -2 1/8 53.50 IP - 3/16 43.56 MO - 3/8 39.63 EK - 3/16 73.31 |
Day Month Year
FOOL-4 -1.46% 1.21% 9.90%
DJIA -0.07% 1.49% 14.88%
S&P 500 -0.23% 1.84% 18.98%
NASDAQ -0.07% 0.71% 21.51%
Rec'd # Security In At Now Change
12/31/97 291 Union Carb 42.94 53.50 24.60%
12/31/97 206 Eastman Ko 60.56 73.31 21.05%
12/31/97 289 Int'l Pape 43.13 43.56 1.01%
12/31/97 276 Philip Mor 45.25 39.63 -12.43%
Rec'd # Security In At Value Change
12/31/97 291 Union Carb 12494.81 15568.50 $3073.69
12/31/97 206 Eastman Ko 12475.88 15102.38 $2626.50
12/31/97 289 Int'l Pape 12463.13 12589.56 $126.44
12/31/97 276 Philip Mor 12489.00 10936.50 -$1552.50
CASH $754.73
TOTAL $54951.67
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