* Q4 revenue outlook disappoints, shares down 3.5 pct
* Q3 sales $618.2 mln, beats Street view $570.1 mln
* Q3 EPS 52 cents, Street view 39 cents
* 'Outperformance has become the norm' - analyst
(Adds analyst comment, executive comment from interview,
By Bernie Woodall and Deepa Seetharaman
DETROIT, Oct 29 American Axle & Manufacturing
Holdings Inc's (AXL.N) third-quarter results trounced Wall
Street estimates on Friday, yet shares slumped due in part
because its fourth-quarter revenue forecast that was weaker
Shares fell as much as 5.7 percent even as the company
lifted its full-year sales outlook to between $2.2 billion and
But J.P. Morgan analyst Himanshu Patel said the company's
2010 sales outlook suggested fourth quarter revenue would be
$507 million to $583 million. The midpoint of this range fell
short of his estimate.
The average Wall Street estimate for American Axle's
fourth-quarter revenue is $559 million, according to Thomson
Chief Financial Officer Michael Simonte said the drop in
American Axle's stock price may have to do with heightened
expectations after a strong showing by auto suppliers in the
"In general, everybody has outperformed expectations and
had a little bit of 'buy on the rumor and sell on the news'
reaction," Simonte said in an interview with Reuters.
Simonte said in an interview with Reuters that the
company's fourth-quarter revenue outlook was between $550
million and $575 million.
Gabelli & Co analyst Brian Sponheimer pointed to the run-up
in the stock prices of suppliers over the past seven weeks.
American Axle's shares were trading near $8.50 seven weeks ago
and rose to over $10 before dropping Friday.
"With suppliers generally outforming consensus
expectations, outperformance becomes the norm," Sponheimer
said. "It becomes very difficult for companies to over-deliver,
partly because shares have appreciated materially over the last
seven weeks in most cases."
American Axle's shares were down 46 cents, or 4.7 percent,
at $9.37, after touching an intraday low of $9.27 on the New
York Stock Exchange.
Detroit-based American Axle reported a net profit of $38.8
million, or 52 cents per share, versus a year-earlier profit of
$19.6 million, or 35 cents a share. Analysts expected earnings
of 39 cents per share.
The earnings beat was fueled by higher-than-expected sales
and a lower-than-expected tax rate in the third quarter,
analysts said. Revenue was $618.2 million, besting the average
analyst estimate of $570.1 million.
Third-quarter results are compared to a year-earlier
quarter in which production was greatly slowed by two of the
company's major customers, General Motors Co (GM.N)[GM.UL] and
Chrysler. Both of those U.S. automakers in the summer of 2009
shut plants as those companies were emerging from
government-sponsored bankruptcies and restructuring.
American Axle builds axles and other driveline components
mainly for larger vehicles, but aims to diversify its business
to include smaller vehicles and revenue from companies other
than GM. Non-GM sales nearly doubled from last year's third
quarter to $147.1 million.
Third-quarter results from auto suppliers this week showed
huge gains in revenue and profit.
Net income gains include American Axle, up 98 percent;
BorgWarner (BWA.N), up 520 percent; Lear Corp (LEA.N), up 287
percent; Johnson Controls Inc (JCI.N), up 33 percent; and
Federal-Mogul Corp (FDML.O), up 430 percent.
Each of the companies has cut costs since the doldrums of
2009, when U.S. auto sales were the lowest in 27 years.
Supplier gains have outstripped the growth in auto sales, which
several automakers and analysts including J.D. Power and
Associates expect to end this year near 11.5 million vehicles,
compared to 10.4 million vehicles in 2009.
(Reporting by Deepa Seetharaman and Bernie Woodall, editing by
Gerald E. McCormick, Dave Zimmerman, Derek Caney)