Caterpillar Run Over By Own Tracks (CAT)

If you were hoping that Caterpillar Inc. (NYSE: CAT) was going to pull a miracle out of the hat with earnings, Monday is going to be a cold day regardless of the weather.  The construction and infrastructure equipment giant did manage to post a 7% sales gain.  That’s where the good news stops.

Earnings were $1.08 EPS on $12.92 billion in revenue.First Call estimates were for $1.29 EPS and almost $12.8 billion inrevenues.  The earnings report is inclusive of some items, but all youhave to do is glance over the release to see how bad things are looking.

The company sees a significant drop in production, and will be cuttingjobs, production and expenses.  This may slash as many 20,000 workers, or 20% of its workforce.

Production volume ahead is being called "severely depressed" and youcan imagine how slow things are.  The company sees earnings for 2009 of about $2.50 EPS vs $4.32 estimates, and put revenues around $40billion, which is below estimates of $47.4 billion.

It is even seeing internal pressure on customer order quality.  It saidthat its accounts past due over 30 days were 3.88% compared with 2.36% atDecember 31, 2007.

This is really taking down futures and may help kill any hopes ofinfrastructure or commodities recoveries.  Shares closed at $35.66 onFriday, and now are trading under $31.00 in pre-market trading.

Jon C. Ogg
January 26, 2009