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Was the Decision to Split Alcoa a Mistake?

Alcoa Inc. (NYSE: AA) reported its third-quarter financial results after the markets closed Thursday, on the heels of its announcement of a company breakup. Earnings were not up to snuff, according to analysts, but these results could also be reflecting a huge mistake that Alcoa has made in choosing to split up.

Alcoa kicked off earnings season with $0.07 in earnings per share (EPS) on $5.6 billion in revenue, compared to consensus estimates from Thomson Reuters of $0.14 in EPS on revenue of $5.68 billion. In the same period of the previous year, Alcoa posted EPS of $0.31 and $6.24 billion in revenue.

After the separation, the innovation and technology-driven value-add company will include the Global Rolled Products, Engineered Products and Solutions and Transportation and Construction Solutions units. In the third quarter, these combined business segments reported revenue of $3.4 billion, after tax operating income (ATOI) of $257 million and adjusted earnings before interest, tax...