Alcoa's shares fall after posting $143M loss in 3Q

NEW YORK -- Shares of Alcoa Inc. fell Wednesday after the aluminum manufacturer reported a third-quarter loss and lowered its 2012 forecast for growth in aluminum demand.

THE SPARK: Alcoa said Tuesday that it lost $143 million, or 13 cents a share, in the July-September quarter, largely due to one-time charges. Its adjusted earnings of 3 cents per share beat Wall Street's expectations. Revenue fell to $5.83 billion from $6.42 billion but still topped analyst forecasts.

The company predicted aluminum demand would increase 6 percent in 2012, compared with its forecast of 7 percent in the previous quarter.

THE BIG PICTURE: Alcoa has been challenged by a global economic slowdown that has weakened prices and created mixed demand for its products.

Alcoa produces aluminum for a wide range of businesses, from automobiles to energy companies. It is the first company in the Dow Jones industrial average to report earnings each quarter, so investors often watch its results for signs of how earnings may unfold for other companies.

THE ANALYSIS: Analysts say Alcoa's business of mining and processing a raw material called alumina used to make aluminum has been hurt by weaker prices. Most expect aluminum prices to improve gradually over the next 12 months.

JPMorgan analyst Michael Gambardella raised his fourth-quarter per-share estimate and share price target. He told clients in a research note that Alcoa is working to lower costs of a key ingredient used in steelmaking and expand its sales. Combined with higher aluminum prices expected next year, the efforts should lead to improved earnings, he said.

Gambardella forecast fourth-quarter earnings of 9 cents per share, compared with his previous estimate of 7 cents per share. Analysts surveyed by FactSet have predicted fourth-quarter earnings of 7 cents per share.

Gambardella raised his share price target for December 2013 to $12.50 per share from $12 per share.

SHARE ACTION: Shares of Alcoa fell 30 cents, or 3.3 percent, to $8.83 in morning trading. The price has ranged from $7.97 to $11.66 per share in the past year.