Boston, MA 12/18/2013 (wallstreetpr) – Gold prices continue to be under pressure and gold producers such as Barrick Gold Corporation (USA) (NYSE:ABX) are not enjoying their time in business. Although hedge funds have shown bullish activity in the stock in recent months, concerns still remain.
The company has dropped almost 54 percent year-to-date at a time when its peers like Newmont (NEM) and Goldcorp (GG) have dropped around 50 percent and 43 percent respectively. The reason ABX seems to have taken a bigger hit in the market is due to its ill-timed decisions. Some of these decisions involve late adjustments to the company’s operations towards the attainment of efficiency.
Barrick Gold Corporation (USA) (NYSE:ABX) needed to have acted faster when gold prices started showing signs of faltering. But the company acted late in the day when a lot had gone bad, perhaps the managed believed that things would get back in shape soon.
Whatever happened that led to the huge plunge of ABX is not important now. What is important is that the company is now consolidating its operations and taking more measures to remain efficient. For example, it has recently announced the layoff of about 1,500 employees in efforts to cut cost.
It has also suspended the troubled Pascua-Lama project. However, this came after the company had already burnt about $5 billion in the project.
Barrick Gold Corporation (USA) (NYSE:ABX) is also in debt having increased its debt level from $6.7 billion to $15.4 billion following the acquisition of Equinox. The company is expecting to reduce this debt by $2.6 billion. This is made possible following the share offering which helped it to raise $2.9 billion in October.
Efforts by Barrick Gold Corporation (USA) (NYSE:ABX) to consolidate and focus on high margin operations are expected to help it post better results in future. However, the rise of the stock to the previous highs might take quite some time and this means that shorts may not have a good day in this stock for now.
