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AK Steel Holding Corporation Message Board

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  • jrpalladin jrpalladin Jan 30, 2000 8:28 PM Flag

    ssb_chi: You have yet to provide any

    automaker contract pricing to value added steel
    shipments. The fact is that in 1999 AKS value added
    shipments were 82% of the total tonnage. In the fourth
    quarter, the Company increased value added shipments to
    87% of the total and in 2000, they should average 92%
    of total tons. This in itself is very significant;
    it will improve the Company's gross profit by $100
    million in 2000 versus 1999. This is enough to offset the
    $100 million increase in raw material
    costs.

    Care to comment on this? Also, please tell me who at
    AKS made the comments which you posted about contract
    pricing?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Unfortunately your recent posts contain some
      serious errors and potential illegalities.

      If AKS
      and X managements got together to push prices upward,
      both managements would end up in jail and the company
      would be subject to serious anti-trust fines. See what
      happened to UCAR.

      The added $100 million that you
      say would come from selling higher value added
      steels, would not go to the bottom line. Unfortunately,
      higher value added steels have much higher costs than
      the commodity grade products.

      I repeat, this
      company will be hard pressed to earn $1.43 per share in
      2000 and maybe less than $0.25 in the first
      quarter.

      The comments about the average contract price being
      down 1% in 2000 came from Dick Wardorp. By the way,
      some of the steelmakers are claiming that their
      contract prices were negotiated "flat" for 2000, but that
      was due to tinplate, where prices went up. AK does
      not make and can not make
      tinplate.

      Incidently, the Mansfield plant is currently profitable, but
      not at the level prior to the lockout. It is also not
      significant to the health of AK.

      As an aside, the
      shares of AK started their free fall prior to management
      talking about their added costs this year. The analyst at
      CSFB lowered his rating on the shares before the
      market opened and the shares tanked on the opening. The
      conference call with the disclosures did not occur until 11
      am. You should be aware that CSFB is the company's
      investment banker. When an investment banker's analyst
      lowers his rating on the shares it is assumed that there
      is a serious problem, since this rarely occurrs.

      • 2 Replies to ssb_chi
      • You know what you're talking about. Been in this
        business longer than I want to admit, can tell you that
        from a pricing standpoint it is very difficult to pass
        on higher prices to truckload quantity buyers. Even
        on the stainless side of the business there is
        foreign product being sold through June without nickel
        surcharges.

      • value added steel are much higher than commodity
        type steel, like about 20 to 30 gross points. Why do
        you think AKS has essentially eliminated commodity
        type steels? Why do you think AKS made $65 per ton in
        the fourth quarter while all other integrated makers
        showed losses?


        And it is a fact that AKS is
        going to replace a substantial amount of commodity type
        shipments in 1999 with valued added steel in 2000 which
        signficantly enhances profitability. And yes, the cost
        differential of value added steel is significantly higher than
        commodity steel; but the price differential between the two
        easily justifies the cost difference.

        AKS and X
        of course, would never violate the Robinson-Patman
        Act. But both of these companies however, do not need
        to cave into the pricing demands made by automakers.
        Both of these Companies are pricing leaders and if
        they don't set their selling levels to cover their
        costs and future capital expenditure requirements, it
        will eventually bankrupt the industry.

        The
        comment made by Wardrop, was it for the entire auto
        industry or was it just for one auto maker? Did it include
        Armco shipments?
        Was it for the entire year 2000 or
        just one quarter? Why don't you print a transcript of
        exactly what Wardrop said in the conference call to
        analysts?

    • My personal opinion -- 169 wont win the lock out
      - they might weaken AKS -0- which I dont understand
      ? -- This is America , capitalism rules . No court
      is going to rule that the workers can run the
      company ? This isnt much different than your home life
      --- your kids get enough votes to overule you ,, so
      they are boss ,, you pay the bills as they decide it
      is appropiate ?
      I would suggest that you go out
      on your own -- then you can make the
      decisions.

      Bottom Line -----> if you guys want to run the world
      -- get out in front and do it !

    • My personal opinion -- 169 wont win the lock out
      - they might weaken AKS -0- which I dont understand
      ? -- This is America , capitalism rules . No court
      is going to rule that the workers can run the
      company ? This isnt much different than your home life
      --- your kids get enough votes to overule you ,, so
      they are boss ,, you pay the bills as they decide it
      is appropriate ?
      I would suggest that you go out
      on your own -- then you can make the
      decisions.

      Bottom Line -----> if you guys want to run the world
      -- get out in front and do it !

      • 1 Reply to sanibel_us
      • Too many shorts, pessimists and anti-AKS
        employees here. Well, all I can say is the sentiment here
        is indicative of an undervalued security. I'd be
        worried if most people were wildly
        optimistic.

        Smart investors won't be swayed by the "noise", the day
        to day minor things and will focus on the big
        picture and how AKS is capitalized to
        out-perform.

        I stick with $2.25 to $3.85 per share and more in
        2001. Also, lots of cashflow and insiders have been
        buying heavily at more than we've paid recently. They
        know something we don't. Time will tell. In 3 mos,
        lets see the insider activity for this time frame.

 
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