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American Axle posts loss amid vast overhaul
By Shawn Langlois, MarketWatch
Last Update: 11:37 AM ET Feb 2, 2007

SAN FRANCISCO (MarketWatch) -- American Axle & Manufacturing said Friday it swung to a fourth-quarter loss on charges stemming from its efforts to become a leaner parts supplier in the face of the automotive industry's massive overhaul.
In midday trading, shares of the Detroit-based manufacturer of axles and driveshafts (AXL) pushed through levels not seen since late 2005, up 4.7% at $21.93.
R.W. Baird analyst David Leiker called the three-month period a "messy quarter," but said his initial breakdown of the results led him to believe American Axle easily topped Wall Street targets. Still, he urged investors to avoid the stock.
"There is a high degree of risk to near-term operating results," he cautioned in a note to clients. "Valuation appears to discount meaningful better results, as well as additional actions to reduce costs/capacity."
American Axle, which derives more than three-quarters of its business from General Motors (GM) , posted a loss of $188.6 million, or $3.74 a share, vs. a profit of $4.5 million, or 9 cents a share, a year ago. Sales came in at $781.1 million.
Analysts polled by Thomson Financial were looking for a loss, excluding charges, of 3 cents a share on revenue of $759.9 million.
The company recorded $181.4 million in special charges relating to its salaried workforce reduction and its buyout offers, which were accepted by about 1,500 union workers.
American Axle joined GM, Ford (F) and bankrupt Delphi Corp. (DPHIQ) in slashing their workforce through buyout and early retirement packages.
"As the domestic automotive industry continues its rapid and unprecedented structural transformation, AAM took difficult, but necessary actions in 2006 to adjust our workforce and production capacity in the U.S. to meet the realities of the new global automotive market," Chairman and CEO, Richard Dauch said in a statement.
American Axle forecast 2007 sales to rise to about $3.3 billion, assuming production from its top North American customers slips by about 2% from a year ago.
The company said it will increase its content per vehicle by about 5%, which will help offset the negative impact of the production declines.
Earnings are expected to come in at $1.25 to $1.50 a share for the year.
 
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