I suppose it could be termed something of a modern-day blitzkrieg. Call it what you will. It's not as if Dow Chemical (NYSE:DOW) hasn't been clobbered enough by the effects of softness in the U.S. housing and automobile markets and climbing inputs costs. Now the company has also suffered a $0.38 reduction in its quarterly earnings from a change in the German tax law.

For the quarter, the company recorded net income of $403 million, or $0.42 a share, versus $512 million, or $0.53 a share, a year ago. In addition to the aforementioned German tax change, Dow incurred another $0.04 a share during the quarter in acquisition costs. Last year's third quarter included a $0.45-per-share charge related to plant closings. If you whisk away special items for both periods, Dow, the largest U.S. chemical maker, would have earned $0.84 a share in the quarter versus a $0.98 figure year over year.   

As CEOs are inclined to do, Andrew Liveris, Dow's leader, put a happy face on the company's quarter, saying, "This was another sound quarter for Dow. We posted record quarterly sales with substantial growth in Europe, Asia Pacific and Latin America. ... All of this underscores that our strategy to grow internationally ... is working."

But much like DuPont (NYSE:DD), which reported earlier, Dow saw its feedstock and energy costs rise by $380 million in the quarter compared to the same quarter of 2006. At Dow, the performance chemicals segment, which produces intermediates and emulsion polymers that typically find their way into paints and coatings for houses and cars, saw a reduction in its EBIT (earnings before interest and taxes) of about 23% year over year. Dow's agricultural sciences group, which recently inked a corn seed cross-licensing agreement with Monsanto (NYSE:MON), was able to increase its revenues by 19% in the quarter.

The key question at Dow seems to involve the company's future. An analyst meeting scheduled for next month was recently cancelled, sparking speculation that the company could be heading toward a merger, acquisition, or other sort of restructuring. We'll no doubt find out soon about Dow's direction.

In the meantime, given a steady intensification of the nation's housing malaise and the upward march of hydrocarbons prices, I'd recommend that Fools allow Dow to weigh in with yet another quarter's results before becoming too enamored with the company.

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Fool contributor David Lee Smith doesn't own shares in any of the companies motioned. He does welcome your questions or comments. Dow Chemical is an Income Investor recommendation. The Fool has a chemically pure disclosure policy.