X: US Steel "Dirties" The Bed

As we have discussed before there is a bubble going on in the steel stocks and they have been good shorts. Here is another example from US Steel that had a loss and sees another coming. All these stocks are down 10-20% since we discussed the bubble in them. You can light up on the shorts at this point, but why ruin a good thing. Longer term there is a lot more downside in these stocks, so hold on to the out of the money options that are near the money if not in the money at this point. Outright shorts can lighten up if they are afraid of a little bounce back as idiots are still trying to push the market up. However, the results out of these companies is a true testament to how premature the "recovery" talks have been and how there is no recovery as well as the premature optimism in stocks like these. These will be good investment longer term as part of the hard asset over paper asset trade. However, it is too early and these stocks are way ahead of themselves and are very expensive and overvalued.

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US Steel reports 4Q loss; sees another coming

US Steel posts 4th-qtr loss on declining sales, sees comparable results in 1Q

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  • United States Steel Corp.

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Symbol	Price	Change
X	51.32	-4.91

On Tuesday January 26, 2010, 9:54 am

PITTSBURGH (AP) -- United States reported a steep loss for the fourth consecutive quarter as sales fell sharply and the company said Tuesday it expects that trend to continue this quarter.

Shares tumbled nearly 9 percent, or $4.89, to $51.34.

Orders from auto and appliance makers are starting to come back, but those improvements are not yet fully reflected in operating results.

Steel prices have edged up from their lowest point seen during the recession. Still, like other manufacturers, Chairman and CEO John Surma has been cautious during a recovery that may take some time.

The Pittsburgh manufacturing giant reported a fourth-quarter loss of $267 million, or $1.86 per share, compared with earnings of $290 million, or $2.50 per share, during the same period last year.

Revenue declined 26 percent to $3.35 billion, from $4.5 billion in the prior-year period.

Analysts surveyed by Thomson Reuters had predicted a loss of $1.43 a share on revenue of $3.1 billion.

Steel companies saw demand evaporate during the recession and the housing crisis when consumers stopped buying cars, homes and appliances. Though there were improvements as 2009 came to a close, U.S. Steel expects first-quarter operating loss "in line" with the fourth quarter.

Automotive, service center, converter and appliance customer order rates in North America and Europe are near their highest levels in the last twelve months, Surma said, while construction demand in North America remains soft.

"A gradually strengthening economy should result in improvements in real demand, while apparent demand will likely be positively influenced by the restocking of the manufacturing supply chain, which we believe is under way," Surma said.

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