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Why U.S. Steel Wants to Go Back to the Carnegie Era

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Dec. 1 2015, Updated 3:31 p.m. ET

Carnegie Era

U.S. Steel (X) closed at $8.07 on November 30 with a market capitalization of $1.2 billion. U.S. Steel’s market capitalization has flirted with the $1 billion level for the last few trading sessions. One could argue that other steel stocks including ArcelorMittal (MT), AK Steel (AKS), and Nucor (NUE) have also been falling. So what’s so special about the correction in U.S. Steel’s stock and its proximity to the $1 billion market cap level? We’ll look at U.S. Steel’s iconic history to answer this question.

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Iconic history

When U.S. Steel was founded in 1901, its authorized capital was a whopping $1.4 billion, making it the largest business enterprise ever launched. U.S. Steel was the first company globally to have a market capitalization in excess of $1 billion. The company accounted for 67% of the total steel produced in the US (DIA) in its very first year of full operation. The company has been a symbol of America’s rise and decline in industrial production.

Historical lows

U.S. Steel’s stock is trading at historical lows now. The company had embarked on an ambitious transformation strategy named after its co-founder Andrew Carnegie. The Carnegie Way transformation was expected to restore the glory days of U.S. Steel. However, looking at the stock’s performance, the company’s value today is lower than what it was a century back. That’s not a pleasant feeling as the company was once associated with inspiring leaders including Andrew Carnegie, J.P. Morgan, and Charles Schwab.

In this series, we’ll analyze what’s going wrong with U.S. Steel. We’ll also look at whether U.S. Steel can recover from its current slump.

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