Smugly, you, Ten, shortie et al think Bush's tax cuts have strengthen the American economy. Well, not surprisingly, you all are wrong one more time. The market today is taking a serious beating. Why? CAT didn't make its numbers. And why did CAT not make its numbers......because the American economy stinks and this time the rest of the world strength couldn't offset America's weakness. That's right......add tax cuts to the rich, supply side economics, GOP voodoo to the pile of failures lurking right out side GOP headquarters.
And btw, ITS THE ECONOMY STUPID!
Caterpillar Squashed
By Nat Worden
TheStreet.com Staff Reporter
7/20/2007 11:04 AM EDT
Industrial giant Caterpillar (CAT - Cramer's Take - Stockpickr - Rating) disappointed Wall Street Friday with a 21% drop in second-quarter profits, as strength from outside North America failed to offset higher costs and weakness in the U.S. economy.
Shares of the Dow component were sliding $8.01, or 9.2%, to $78.97.
The Peoria, Ill., company reported second-quarter earnings of $823 million, or $1.24 a share, down from $1.05 billion, or $1.52 a share, a year earlier. Analysts, on average, expected earnings of $1.49 a share.
Caterpillar's top line beat expectations, with overall revenue up 7% to $11.36 billion, compared with Wall Street's expectation for $11.1 billion. All the gains, however, came from abroad.
Sales and revenue in North America fell 10% to $5.1 billion due to a 14% decline at the company's domestic machinery business and a 8% drop in engine sales.
"Disappointing earnings in the second quarter were attributable to the sharp negative swing in on-highway truck engine profitability, weakness in North American machine sales, continued selected supply chain disruptions and higher material costs," said Caterpillar CEO Jim Owens in a press release.
Also, Caterpillar's core operating costs rose by $435 million, mostly because of rising material costs and operating inefficiencies.
"While costs were a challenge, we were pleased with the spectacular sales growth outside North America and the performance of our engine businesses other than on-highway truck," said Owens.
Despite its shortfall, the company backed its previous outlook for full-year earnings in a range from $5.30 to $5.80 a share. Caterpillar sees revenue of $44 billion -- the high end of the range it had forecast earlier. That comes despite a sobering outlook on the U.S. economy.
Caterpillar is expecting "below trend [economic] growth" in North America, with gross domestic product increasing by 2.1% for the year. It expects continued weakness in the housing market and a "very weak industry for heavy-duty truck engines."
The company said it expects sales outside North America to be up 24% for the year -- representing a year-over-year rise of about $4.5 billion. That should more than offset a $2.4 billion, or 12%, sales decline in North America.
"This reflects solid 2007 economic and industry growth in most of the world outside North America," said the company.
Caterpillar's results play into lingering uncertainties about the state of the U.S. economy amid rising interest rates and a broad housing slowdown, but they also spoke to the strength of the broader global economy.
Sales in Europe, the Middle East and Africa rose 35%, boosted by increased deliveries to end users, economic growth in Europe, construction activity in Africa and increased activity in drill rigs and mine development.
Caterpillar said sales in the Asia/Pacific region rose 23%, boosted by growth in mining spurred by higher prices for metals and coal and higher construction spending in China.
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