Summary Blog

http://news.yahoo.com/s/ap/20090408/ap_on_bi_ge/earns_alcoa;_ylt=Apmia148YBDx.RwBIH535hmyBhIF

Summary:
This article talks about how this aluminum maker company has suffered its second straight quarterly loss. They reported a loss of $497 million as the economy continues to downfall. Alcoa Inc. is the world's third largest aluminum maker expects that the demand for aluminum will continue to fall for the coming week. They stated that their revenue dropped 44%, from $7.38 billion to $4.15 billion from the past year. They plan to sell stocks and stocks to help cut down the costs by more than $2.8 billion yearly. Analysts have suggested that the demand of aluminum will not be rising anytime soon.

Connection:
This article links to chapter 15, comparing financial data. It also links into the simple concept of supply and demand we had learnt in J.A. The article stated that the company had lost 44% in revenue since last year, which can be calculated by ($4,150,000,000/ $7,380,000,000 x 100%). To try to regain that lost on revenue, Alcoa will be trying to cut down on their expense and cost of goods sold. At the same time, they would try to get more people to invest into their business. But with the current downfall of the economy, not many people would like to invest into a company that is struggling and holds a great inventory of inexpensive aluminum.

Reflection:
I think that the main problem Alcoa is facing is that, the order for aluminum, used to make cars and airplanes, has been dropping ever since last fall when the recession began. I think that investors would not want to invest into this company, because they would know that aluminum is not very valuable right now. The demands have greatly dropped, but the supplies keep piling up. They should try to cut down on production until they get rid of their inventories.