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In any undertaking, someone always has to go first, and market participants have given Alcoa (NYSE:AA) the honor of being considered the first company to report its quarterly financial results each earnings season. Coming into Thursday afternoon's third-quarter financial report, Alcoa investors didn't have extraordinarily high expectations of the lightweight-metal specialist, and were fully prepared for year-over-year declines in both sales and net income.

The magnitude of those declines, however, was even larger than expected, and the stock responded negatively immediately after the report. Let's take a closer look at what Alcoa said, and what it means for some of its peers going forward.

Alcoa gets crunched
Alcoa's third-quarter results brought past improvement to an abrupt halt. Revenue dropped 11%, to $5.57 billion, which was even worse than the 9% sales decline that most investors were expecting to see. On the bottom line, net income plunged 70%, to $44 million, and even after accounting for special items, adjusted earnings of $0.07 per share were just half of the consensus forecast among those following the stock.

As we've seen in past quarters, though, there was considerable choppiness across Alcoa's major segments. The Engineered Products and Solutions division posted record revenue of $1.4 billion, which was up 35% from year-ago levels due largely to major acquisitions over the course of the year. Yet even with the addition of Firth Rixson, operating income for the segment fell $4 million, to $151 million.

Alcoa's other segments also took hits in terms of profitability, with transportation and construction solutions seeing a 12% drop in operating income, global rolled products suffering about a 10% decline, and primary metals posting an operating loss of $59 million compared to a larger profit in the year-ago period. Only the Alumina segment saw better profits, with operating income rising to $212 million thanks to better pricing and volume.

Alcoa CEO Klaus Kleinfeld was quick to remind investors of the challenges the company faced. Yet in his words, "We continue to be laser-focused on the things we can control," and he pointed to cost-cutting measures in the upstream business and innovation in the value-add side of the company as helping to drive Alcoa forward.

What's ahead for Alcoa's markets?
For the most part, Alcoa held onto its previous estimates for overall demand in its global end markets. Aerospace should still grow globally by 8% and 9% this year, with long-term aluminum demand rising 6.5% this year on a path to double from 2010 levels by 2020. Alcoa slightly increased its forecasts for global airfoil sales, North American and European auto production, and European heavy-duty truck and trailer production. China will weigh on Alcoa's results, though, with reductions in expectations for automotive, heavy-duty truck, and commercial building and construction sales.

More importantly, though, Alcoa is looking forward to the recently announced split of its value-add and upstream businesses. In the value-add arena, Alcoa pointed to the RTI International acquisition as driving success in obtaining key contracts from major players including Lockheed Martin and Airbus. The company's Micromill project continues to move forward, and investment in its 3-D printing center could help produce key advances in the future that will further distinguish Alcoa from its competitors.

Meanwhile, in upstream, further curtailments of production at higher-cost facilities showed that Alcoa continues to work at reining in costs and focusing on being as profitable as possible. Alcoa has made a lot of progress in surpassing its peers with respect to cost, and that should pay off no matter what happens to pricing in the future.

Despite the promising long-term position that Alcoa appears to be in, investors remained focused on the short-term implications of its poorer-than-expected results. The stock fell nearly 5% in the first half-hour of after-hours trading following the company's announcement. No matter how confident long-term investors might be about Alcoa's future prospects, skeptical shareholders will insist on seeing concrete evidence of the transformation's benefits before they start bidding up shares substantially from their current beaten-down levels.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.