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Goodyear 3Q earnings up 51 percent

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THOMAS J. SHEERAN | October 29, 2013 10:43 AM EST | AP

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CLEVELAND (AP) — Goodyear Tire & Rubber Co.'s third-quarter profit rose 51 percent on strong performances in Latin America and North America, the tire maker said Tuesday.

But shares dropped 7 percent in morning trading as the company's sales dropped 6 percent, to below the level Wall Street expected.

Akron-based Goodyear said it earned $166 million, or 62 cents per share, for the July-September period. Excluding charges, Goodyear earned 68 cents per share, beating the Wall Street estimate by 1 cent.

Revenue fell 6 percent, to $5 billion from $5.26 billion. Analysts polled by FactSet expected higher sales of $5.27 billion.

Goodyear sold more tires in North America and was aided by a shift in Latin America to higher-value replacement tires.

Chairman and CEO Richard J. Kramer said the company expects operating income for the year of more than $1.5 billion. It had predicted $1.4 billion to $1.5 billion.

"As the industry continues to recover, we see strong volume growth in the segments we are targeting," Kramer said.

The company announced in September that it was reinstating its quarterly dividend after more than a decade. It is also starting a share buyback of up to $100 million.

But last week Deutsche Bank downgraded its rating on Goodyear to "Hold" from "Buy" and lowered its target price on the stock to $26 from $29 based on concerns about margins over the next few years.

Goodyear shares dropped $1.59, or 7.2 percent, to $20.46 in late morning trading. The stock had gained 60 percent this year.