The Goodyear Tire & Rubber Company (GT)

big problems with union contracts just like gm and chrysler and we all know what happened to them !!!!!!!!!!!!!!!!

Shareholder equity has steadily been evaporating. Audit Integrity rates the company a greater risk of filing bankruptcy than 87% of other companies. The automobile market remains under huge strains,consumers cannot get loans. Stock Is way overpriced. TS

up 40% in 3 months, overdone

#19 Worst Toxic Polluter (http://www.peri.umass.edu/toxic100_index/)

They are not financially healthy by my standards.

Based on my experience trying to purchase used tires, a very large number of people are buying used instead of new. I have never seen used tire shops so busy or their inventory so low.

The book says this is a gonner over time. the Market says it should go UP when it is still losing money??? Where's the logic in all of this?

4x trouble
1. Euro denominated profits
2. pension plan
3. debt burden
4. demand destruction in auto industry

Debt debt debt.

Goodyear Danville Plant slow down. Tire buliders on short time. Loss of income shut down of Tx plant during Ike.

Goodyear bought some of the most expensive negative publicity imaginable with the fiasco at the NASCAR Brickyard 400. Their tires will forever be associated with one of the most pathetic races in NASCAR history. This was not a good way for GT to spend their advertising budget.

This company has too high of costs in a highly competitive industry. It doesn't have a product that separates it from it's competitors.

because goodyear is commited to high end tires for gas guzzler truck and suvs and we all know where these market has gone in the last six months . Folks in general will ride less mean fewer tires wearing out = fewer sells. Oil key ingredent for tires and belts 140.00 per barrel means higher operating cost to run boilers,higher raw material cost,higher shipping cost. Goodyear has made the mistake of sending production to china about 7000 miles away from east coast USA. Shipping cost has tripple in last year and the Dollar has weaken making manufacturing in the US more attractive except goodyear can't stop in midstream and continues to head in the more expensive direction thinking it will save them money.They should have been in China five years ago and bring manufacturing back to this side of the world now to take advantage of the weak dollar and save on shipping. These guys should have some cap.all around to minimize on shiping cost and take advantage on cheap dollar

Capitalization problem. Products need improvements.

I am of the opinion that there are a multitude of forces that are about to come together in a 'perfect storm' (of underperformance) for GT.

1. Rubber is already up 14% this year and we still have 3 quarters to go. The increase in rubber prices from 2006 => 2007 was about 3.6% and shaved about 1% off Gross Margin for the year. Looking at the 14% rise so far 3.6% seems tame. I can't imagine that the increase this year is going to do less damage....

2. Oil, as we all know, has been skyrocketing. This is a minor input for GT compared to rubber but still affects a large portion of their product line.

1a,2a. No hedging program (that I could find) to handle these commodity risks.

3. Scary scary US auto market and general economy. Auto sales are predicted to be stagnant at best for the next two years. On top of that the horrible economy means people will defer buying replacement tires or trade down to the cheaper alternatives.

4. ASIAN INFLATION!!!! Inflation is finally catching up with China's breakneck growth (as well as the other Asian economies). Inevitably this is going to affect the cheap production GT has overseas.

The one bright spot is that US sales are no longer a majority of revenue. If GT international demand can keep up they might stave off a cratering in the US. I am still bearish for the medium-long term though.

Goodyear Tire and Rubber products will maintain a steady market. It doesn't look like it's ties to the Nascar circuit have helped, however they are trying to remedy the issues that have come about as quickly as possible. Their standard automotive market has picked up in the year and a half that has gone by since a labor strike with the United Steelworkers back in October of 2006 interrupted their manufacturing processes. It should probably thank it's workers for helping strengthen their market price as investors pumped more money to keep the organization afloat.

auto sector down

Get short 18.45 is on the way

They just had a strike hit them.