Visteon Surrenders Spot on S&P 500 Index

Embattled auto parts supplier Visteon Corp. (VC) received another blow Wednesday when Standard and Poor's dropped the company from its flagship 500 Index.

Visteon's market capitalization, currently less than $850 million, pales in comparison to the $4 billion market cap that companies typically have to carry to garner S&P 500 consideration. The auto supplier, whose market cap has frequently slipped below $1 billion this year, was bumped when S&P decided to allow Viacom Inc.'s (VIA VIAB) CBS Corp. (CBS CBSA) split-off into the fund, David M. Blitzer, managing director & chairman of the S&P's Index Committee, told Dow Jones Newswires. Viacom had been trading as a single entity and was already in the S&P 500.

"Visteon's removal was dictated by the fact its market cap dipped far below what was reasonable," Blitzer said. He said Visteon was among the bottom-performing companies in the 500 Index.

S&P did not have any communication with Visteon prior dropping it from the index, Blitzer said. Visteon spokesman Jim Fisher said the company had no comment on S&P's decision.

The move is likely to trigger a selling of Visteon shares by some institutional investors, Argus Research Corp. auto analyst Kevin Tynan said. Many funds strictly hold S&P 500 companies, while other funds have some flexibility in how they use the 500 Index as a benchmark.

Shares of Visteon recently traded at $6.43, down 43 cents, or 6.3%, on volume of 1.95 million compared with average daily volume of 2.2 million. The shares had fallen as low as $6.38 Wednesday morning. Over the past 12 months, the company's stock has underperformed the entire S&P 500's 12-month performance by about 30%.

The auto supplier's stock fell as low as $3.14 on May 11 prior to a bailout orchestrated by former parent Ford Motor Co. (F) in May. Ford agreed to take 23 North American manufacturing plants and facilities from the company and grant its top supplier price increases, loans and advanced payments. The bailout immediately sent Visteon shares above $8, and Visteon shares eventually neared $11 as details of Ford's bailout became clearer.

The Ford deal should add between $1.7 billion and $1.8 billion to fourth-quarter earnings. The gains will be offset by a 40% decline in revenue triggered by the transfer of business to Ford and the decision to exit unprofitable sectors of the auto parts industry.

The Street has soured on Visteon in recent months amid the company's $200 million third-quarter loss and added restructuring plans. The Van Buren, Mich., auto supplier has identified more than 20 facilities worldwide representing as much as $4 billion in revenue that are either unprofitable or noncore - or both - that need to be fixed in coming years.

600450 Visteon Surrenders Spot on S&P 500 Index
Date: 4 January 2006

See more news about:

Others also read

Owners of Lincoln Glass in Newport, Dan and Elayne Mason, celebrated their 50th anniversary in the business this year. Dan's parents, John and Grace Mason, established Lincoln Glass in 1956 and oversaw day-to-day operations for 20 years.
Potters Industries Inc., an affiliate of PQ Corporation, announced today that, effective February 15, 2007, the price on all Metal Finishing Glass Bead and Ground Glass product shipments will increase up to 3 cents a pound.
Edward A. Shriver Jr., a Pittsburgh architect who works in retail store design, encourages architects and retail owners alike to "think outside the box," light years away from the designs that have dominated American retail architecture in recent decades.
Hoya Corp., Japan's largest optical glass maker, agreed to buy camera maker Pentax Corp. for 90.6 billion yen ($765 million) to add endoscopes and surgical scissors.
Strange specimens of natural glass found in the Egyptian desert are products of a meteorite slamming into Earth between 100,000 and 200,000 years ago, scientists have concluded. reported that Tarnaveni (Romania)-based Gecsat, estimates an approximately 6.4 million-euro turnover for this year, a 16% drop against last year, when the company posted a 7.6 million-euro turnover.

Add new comment