Investors were pleased with the earnings news from specialty metals manufacturer Allegheny Technologies Incorporated (NYSE: ATI). They bid the stock up some 6% Tuesday, January 29 despite the fact that shipments and operating profits in 4Q2007 slipped and are expected to continue to be soft in 1Q2008.

For the year, Allegheny Technologies posted record sales of $5.45 billion, up 10%. Net income shot up 30% to a record $747 million. Cash flow increased by $121 million so that the company has more cash than debt, operating profit increased by 23%, EPS hit $7.26, and international sales topped $1.5 billion, another record. As a result, Allegheny Technologies initiated a half-billion dollar stock buy-back program and raised the dividend for the third straight year.

Overall, the picture looks good, but there are some negatives. Raw material costs continue to increase. Demand for stainless steel products was "extraordinarily weak," offset in part by stronger demand for tungsten and tungsten carbide products. Demand remains strong in the commercial aerospace and defense segments which results in strong demand for titanium based products for aircraft frames. Supply chain uncertainties with the Boeing 787 Dreamliner, however, may curtail operating profits in that segment.

Given its diverse product offerings, its expanding joint centure in China, Allegheny Technologies appears able to withstand whatever the U.S. economy will do in the coming months.