Alcoa LOST $-0.01 per share
Pure, unadulterated, absolute and total horsepuckey.
An operation which has been sold isn't included under ANY circumstances in results from continuing operations. Not even by the most boneheaded or dishonest accountant or auditor.
Any auditor or corporate officer who signed off on such a ridiculous, easily detectable deception would be exposing himself to up to 20 years in federal prison under Sarbanes-Oxley.
Even funnier when considering this ludicrous claim is the fact that the Chalco shares were held by Alcoa as an INVESTMENT. They originally owned 8% of Chalco and about 7% when they sold it.
Chalco was NEVER included in Alcoa's operating results, nor could it EVER be included under any theory of GAAP-compliant accounting.
To further demonstrate just how ridiculous the claim is, here are the operating results in terms of after tax operating income from continuing operations by segment from the earnings press release (in millions):
Alumina: $215
Primary Metals: $283
Flat-Rolled Products: $61
Extruded/End Products: $13
Engineered Solutions: $60
Packaging/Consumer: $36
That's $668 million of earnings from continuing operations. Before deducting miscellaneous general corporate expenses of $34 million and minority participation interests of $79 million.
Which leaves net after-tax income of $555 million, or 64 cents per share, which is what they reported.
If Alcoa had included the one-time gain of $1.8 billion as GAAP earnings, their earnings would have been about
$2.67 per share.
I don't know if the original poster wrote this junk or plagiarized it, but whoever wrote it doesn't have the faintest first clue about Alcoa, Chalco, GAAP, Sarbox or accounting in general.
The gain on asset sales was $0.65 per share.
Isn't it fun to beat a dead horse?
To further illustrate the innumeracy of this lunacy, start with the fact that Alcoa has about 900 million shares outstanding.
Their net gain on Chalco was $1.8 billion and they didn't realize any other gains of any consequence.
The gain on asset sales was about
2 bucks a share, not 65 cents.
One has to wonder what was it that had motivated Alcoa in the first place to sell CHALCO in the fastest growing region of the world with surging aluminum demand that is reputedly growing at 37%. It could not possibly be an attempt to head off what is an earnings calamity--could it?
Well, no, it couldn't. And one doesn't have to wonder anything.
Alcoa sold their interest because their plan to do a joint smelting/refining venture with Chalco at Pingguo didn't work out.
Those guys at Alcoa are really dumb, aren't they?
They realized a profit of about 13 times their investment for lending their good name as a primary investor to Chalco to help them to float their IPO. Now they've got $2 billion to invest elsewhere, for instance, in joint ventures with CITIC, as they have already done.
Then we have silly accounting conspiracy theories propounded by people of unknown provenance.
Reality is more useful.
Disclaimer: I don't currently own AA (I have often in the past,) but I think I may buy some soon. I've been eyeing the chart for the last couple of weeks. The $39 area looks about right for a hold for 6 months or so.
