What: Shares of Freeport-McMoRan (FCX 1.03%) were down about 10% Thursday afternoon after the company reported its second-quarter financial results this morning.
So what: Investors were already expecting weak results from Freeport-McMoRan given the poor price performance of key commodities like crude oil and copper in recent months. But Freeport's revenue took a steeper-than-expected 23% dive, and the company had to take another impairment charge against the carrying value of its oil and gas properties. As a result, Freeport suffered a GAAP net loss of $1.78 per share, and even after excluding one-time items, adjusted earnings of $0.14 per share were less than a quarter of the $0.58 per share the company earned this time last year.
Now what: CEO Richard Adkerson said that "all options are on the table" in dealing with the poor pricing environment for energy products and mined metals. The company has already filed a registration statement with the SEC to sell off a portion of its oil and gas business in a potential initial public offering, and further sales of assets or project stoppages could also become part of Freeport's strategic plan going forward. Still, with current oil prices still far below the $72-per-barrel carrying value on Freeport's books, additional impairments could become necessary if the energy market doesn't improve soon. Moreover, copper prices have fallen to their lowest levels in six years, and that bodes poorly for Freeport's prospects for the immediate future.