KeyBanc downgrades Goodyear's stock

May 22, 2006

KeyBanc Capital Markets, a division of McDonald Investments Inc., has downgraded Goodyear Tire & Rubber Co.'s stock (GT) from "Buy 2" to "Hold 3."

"In our opinion, the GT management team continues to do a very respectable job in attacking the plethora of GT challenges in an orderly and successful manner," says the company. "Progress has been evident in every quarter. We believe the bench is strong. But even the best of managements may not be able to overcome all the headwinds now blowing in GT's face."

According to KeyBanc analyst Saul Ludwig, the concerns, many involving the business environment in North America, include the following:

* pricing, particularly the possible return of month-end specials by Goodyear and a May pricing special offered by Michelin North America Inc.

* weak tire demand in the face of high gasoline prices.

* possible production cuts, brought on by overflowing inventories (at the manufacturing level).

* increasing raw material costs.

Goodyear's stock price on the New York Stock Exchange closed at $13.53 on Friday, May 19. That compares to a 52-week high and low of $19.31 and $12.78, respectively.