Replies to post #2860 on Alloy Steel Inc. (fka AYSI)

[gilead23]

I don't think anyone is giving them a pass

I have been tougher on them at times than anyone but again the weak numbers were obviously a revenue timing issue. What is the difference if you produce 4 million in product but ship by June 30 or if 1.5 million of that slips to the first week of July? That is in effect what we have here.

From a business perspective its beyond irrelevant but because they report based on what was shipped as of Q end the numbers look terrible. The same people bidding it down to 1.45 will be the same ones bidding it up to 4 when next quarters numbers look spectacular due to revenue timing issues. I get the feeling that noone actually understands this.

There has been some inconsistency in numbers but the overall trend is steadily moving results northward.

All of the above of course could be dead wrong but I doubt it.

[b9molecule]

houtheman

this precisely why they want and need the second mill. More business, more customers, more orders coming in at different times should smooth out (somewhat) the current fluctuations, and the second mill might double capacity virtually over night. Think about what that will do to revenues and earnings Y/Y.

[SAMNOTSAMUEL]

Being unpredictable is a problem for sure, but management is stating that they are aware of their deficiency and implying that the 2nd mill will increase predictability.

If the company can make 50 cents over 4 quarters with the new mill, $6 to $8 seems quite possible.

sam

[littlefish]

Comment?

Faith:)

[cleverrox]

Iron ore prices are set by a monopoly of three ore producers. Therefore they do not follow market dynamics any more than the worthless diamond rings we buy our wives. The diamonds are worthless because of oversupply yet by hording them and selling only the same amount each year the diamond monopolies manage to keep prices high.

The only market dynamic you can take to the bank is that iron ore producers will squeeze every last ounce out of steelmakers. As steel prices decline so will iron ore prices. However I feel iron ore prices will remain high because the prices increases the last four years have little to do with supply and demand and everything to do with Rio Tinto and BHP merging.

On the downside I don't know that this increase in iron ore price will necessarily lead to a huge boost to iron ore production among the big three. Fortunately AYSI has plenty of room to grow with just the current amount of mines opening annually.

http://paguntaka.org/2008/07/08/mining-exploration-result-price-increase-price-of-iron-ore-mine-will-increase-the-price-of-steel/