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Non-Tech : CAT-Caterpillar

CAT 577.32

-1.0%

2:35 PM EDT

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To: Mohan Marette who wrote ()	8/18/1998 1:08:00 PM
From: Paul Berliner	Read Replies (1) of 110

CAT & DE, both of whom reported earnings today, are in deep trouble. The Deere press release mentions production cuts for the next Q in response to weaker demand. In addition, any international freight shipping Co. will tell you that Intl. orders are way down for CAT & DE equipment. The wild profit growth of the last few years is over for both, as infrastructure expansion in emerging markets is curbed due to rampant economic problems. The 2 are up somewhat today because of the market rally, but a sideways session tomorrow should hammer 'em. An IB upgrade on either of the 2 at this point would be bewildering... estimates have to be cut. Also, Intl. sales growth for CAT excluding the Perkins acq. shows significant slowing, and CAT also just reported its most lame Q2 of cash flow in over 7 years. Oh, we were also in a recession at that time,a scenario many are predicting to occur sometime in the coming 12 months. Both companies are not going to be able to keep up with their prior performances. Share buybacks are the only thing that enabled DE to hit estimates and CAT to approach 'em.

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