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AK Steel Holding Corp. (AKS - Analyst Report) won a lawsuit brought against the company by two French units of the steel giant, ArcelorMittal (MT - Analyst Report). The suit alleged that AK Steel and two other steel producers infringed upon a U.S. patent for aluminum-coated, boron-bearing carbon steels, used primarily for high-strength automotive applications. However, the jury found no infringement of the ArcelorMittal patent.

The decision now allows AK Steel to begin offering the product for sale immediately to the U.S. customers. Though the company had the capability to produce steel, prospective customers were not buying because of fear of a legal conflict.

AK Steel employs about 6,200 people and produces flat-rolled carbon, stainless and electrical steel products, as well as carbon and stainless tubular steel products.

During the third quarter of fiscal 2010, AK Steel posted net loss of $59.2 million or 54 cents per share versus a net income of $6.2 million or  6 cents per share in the year-ago quarter. Reported losses were higher than the Zacks Consensus loss of 34 cents per share.

AK Steel has a more diverse product portfolio compared to its peers. The company is focusing on markets and products that have greater potential in the long term. However, average selling prices are lower, as the U.S. and global markets are on a gradual recovery. The ongoing slowdown has marred prospects in the housing and construction sectors. We expect AK Steel to report a weak fourth quarter with rising iron ore costs and moderating steel prices.

AK Steel faces stiff competition from Nucor Corporation (NUE - Analyst Report), Steel Dynamics Inc. (STLD - Snapshot Report) and ArcelorMittal.

Currently, AK Steel has a Zacks #3 Rank (Hold) for the short term and an Underperform recommendation for the long term.

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