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Goodyear warns on 3Q, 4Q
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September 21, 2000: 9:26 a.m. ET
Sees breakeven or slight loss in both periods despite Firestone recall
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NEW YORK (CNNfn) - Goodyear Tire & Rubber Co. warned Thursday that, at best, it will break even this quarter and next, results that are well below even lowered earnings expectations for the troubled company.
The world's largest tire maker blamed rising raw material and energy costs, the declining value of the euro, weak pricing conditions worldwide and lower-than-expected volume in North America and Europe -- despite the sudden rush to replace 6.5 million recalled tires made by competitor Bridgestone/Firestone Inc.
 "The company's North American tire business is realizing benefits from the Bridgestone/Firestone recall as consumers select Goodyear tires as replacements," the company's said. " Global economic and industry conditions, however, have deteriorated even beyond Goodyear's most-pessimistic assumptions, preventing the benefits from flowing to the bottom line."
While it now seeks to break even, Goodyear said it may even see a small loss this quarter and next. Analysts surveyed by earnings tracker First Call had forecast the company would earn 36 cents a share in the third quarter and 40 cents in the fourth quarter.
Analysts have been lowering earnings forecasts for the company since early August, despite the woes at competitor Firestone. The estimates had been as high as 58 cents for the third quarter and 68 cents for the fourth quarter as recently as the beginning of August.
Goodyear earned 51 cents a share from operations excluding special gains in the third quarter of 1999 and 30 cents a share in the fourth quarter of 1999, according to First Call.
Goodyear is not the only Bridgestone/Firestone competitor failing to thrive in the wake of its competitor's woes. French tire maker Michelin posted a first half net profit Tuesday of 210 million euros, or $179 million, down from the 296 million euros a year earlier and below the net profit 281 million euros forecast by analysts surveyed by Reuters.
Goodyear named a new president and chief operating officer last Thursday, tapping former Eastman Kodak Co. (EK: Research, Estimates) executive Robert Keegan. He starts at the company Oct. 1. Goodyear Chairman and CEO Samir G. Gibara pointed to that appointment as part of its response to the problems in the warning statement.
Goodyear announced price increases earlier this year that were not matched by competition, lowering its sales volume and revenue. It also had expected a euro worth about 94 U.S. cents, rather than the current 84-cent range. The slide of the euro reduces revenue from European tire sales.
Shares of Goodyear (GT: Research, Estimates) lost $2.75 to $18.25 in pre-market trading on Instinet Thursday, after sliding 88 cents to $21 in trading Wednesday. 
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