Cliffs’ 6B writedown could wipe out shareholders’ equity, analyst says• 3:43 PM

Carl Surran, SA News Editor

• Cliffs Natural Resources' (CLF -8.4%) $6B writedown on its Q3 earnings could wipe out shareholders’ equity and could even turn it negative, BMO analyst Tony Robson warns as he points out that CLF had net shareholders’ equity of ~$6B at the end of June.
• Robson notes that new CEOs often take the opportunity to “sweep the broom” and get rid of assets, leading to impairments such as this one, but the sheer size of this charge "essentially confirms, subject to an upturn in prices, that the vast bulk of the company’s investments in the last decade prior to the appointment of new CEO Lourenco Goncalves was misspent."
• Wells Fargo's team says the markdowns call into question the ultimate sale price of CLF's non-core assets.