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U.S. Steel reported a year-over-year surge in Q4 profits which easily beat Street estimates ($2.50 vs. $2.19-$2.21/share), but says it expects a decline in Q1, sequentially from Q4. Q4 net income totaled $297 million (vs. $109m, $0.85/share last year) on sales growth of 8.8% to $3.77b. US-Steel-X-1yr-chart-01-29-07 Chairman and CEO John P. Surma commented on 2006, calling it "another outstanding year", saying strong cash flow generation was used to pay down $600m of debt, repurchase $442m shares, increase funding of its domestic benefits plans by $190m, "make significant" capex investments and double its common dividend to $0.20/share. For the firm's outlook, he says, "We expect first quarter results to decline from the fourth quarter, but flat-rolled demand is firming and we have restarted several domestic blast furnaces to bring our production in line with improving order rates." In pre-market trading U.S. Steel's shares were last at $78.20 on thin volume of about 10k, up 1.7% over yesterday's close of $76.88.

• Sources: Earnings release [pdf], Bloomberg, MarketWatch, WSJ
• Related commentary: U.S. Steel: Strong Prospects -- Barron's, Will Another Iron-ore Price Hike Stop Surging Steel Stocks?, Earnings Estimates: At Odds With Traditional Analyst Estimates
• Stocks and ETFs to watch: United States Steel Corp (NYSE:X). Competitors: Mittal Steel (NYSE:MT), Nucor (NYSE:NUE). ETFs: Market Vectors - Steel (NYSEARCA:SLX), SPDR Metals and Mining ETF (NYSEARCA:XME)

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Source: U.S. Steel Q4 Profit Beats Street on Higher U.S. Prices, EU Demand

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