Caterpillar disappoints badly

Caterpillar Inc. (CAT) today reported its first quarterly loss in 16 years. The heavy equipment manufacturer said the worst economic crisis since the Great Depression will cause earnings to be weaker than expected.

The first-quarter loss of $112 million, or 19 cents a share, compared with a profit of $922 million, or $1.45, in the first quarter of 2008. Revenue dropped 22 percent to $9.22 billion. Excluding one-time items, profit was 39 cents, beating the 20-cent consensus forecasts of analysts surveyed by Bloomberg News. The guidance for the Illinois company, though, was simply dreadful.

In January, Caterpillar said profit would be $2.50 this year. The Bloomberg consensus is $1.77. Caterpillar's yearly forecast issued today is $1.25. Sales will be about $3 billion below expectations. Shares are getting punished in pre-market trading.

Caterpillar's guidance also is squishy, saying that it expects to be profitable despite a lower revenue outlook and expects "strong cash flow." But there remains a cloud over the company caused by among other things the collapse of the ethanol market and the depressed housing market. The company has already addressed the downturn by cutting 24,000 jobs since January. More, though, needs to be done.

"A great deal of uncertainty exists in the global economy, making it extremely difficult to know how our customers will respond during the remainder of 2009," said Chief Executive Jim Owens in a press release. "We will take action to keep Caterpillar lean, while at the same time making strategic product and operational investments to position Caterpillar for long-term success when the economy does recover."

Maybe things will start to improve for Caterpillar once money from the economic stimulus flows down to the states. Until then, it will be a tough slog.
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