Archive for April, 2010

Caterpillar turns 1Q profit, sees growing economy (AP)

Monday, April 26th, 2010 | Finance News

OMAHA, Neb. – Caterpillar says the global economy is clearly improving, so it's planning to increase production of its mining equipment after reporting a strong first-quarter profit on Monday.

The Peoria, Ill., company offered an encouraging view of the economy and predicted worldwide growth of about 3.5 percent. But Caterpillar has still only hired back about 2,000 people since eliminating 19,000 full-time jobs and about 18,000 contract and part-time workers last year.

Caterpillar Chairman and CEO Jim Owens said industry activity and orders are significantly higher than last year and are at record levels in some areas. As a result, Caterpillar is ramping up production to meet increasing demand.

After the company's earnings report, Caterpillar's shares jumped more than 4 percent to top $70 for the first time since 2008.

Caterpillar expects the most growth this year in developing areas like Asia and Latin America. The company's iconic yellow-and-black machinery is sold in so many places and used by so many industries that its results are considered an indicator of the economy's health.

"We're in a revival. There's no doubt about it," Chief Financial Officer Dave Burritt said. "We're heading up, and it's driven by the emerging markets. No doubt."

Edward Jones analyst Jeff Windau said Caterpillar is reaping the benefits of the cost cutting it did last year, and the company's results definitely show the economy is improving.

"I think they did a great job managing through the downturn," he said.

Caterpillar boosted its profit outlook to between $2.50 and $3.25 per share. That's up from $2.50 per share.

Caterpillar also increased its sales and revenue forecast to between $38 billion and $42 billion; previously, it predicted sales and revenues between $35.6 billion and $40.5 billion.

Caterpillar said it's main concern is that central banks in the United States, Europe and elsewhere might raise interest rates too soon and cause another downturn, but the risk of that is low.

During the first quarter, Caterpillar earned $233 million, or 36 cents per share compared with a loss of $112 million, or 19 cents per share, a year earlier, when the recession and ensuing layoffs hurt results.

Excluding a health care tax accounting charge of $90 million, the Peoria, Ill., company would have earned a 50 cent per share.

Without the financial hit related to the new health care law, Caterpillar easily beat the expectations of analysts surveyed by Thomson Reuters, who were looking for earnings per share of 39 cents.

Caterpillar's revenue fell 11 percent to $8.2 billion, which was short of expectations. But the revenue and profit outlook surprised many and company shares jumped $3.20 to $71.98 in afternoon trading.

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On the Net:

Caterpillar Inc.: http://www.cat.com

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Court: Wal-Mart to face massive class action suit (AP)

Monday, April 26th, 2010 | Finance News

SAN FRANCISCO – A divided federal appeals court in San Francisco says Wal-Mart Stores Inc. must face a massive class-action lawsuit that claims the world's largest private employer discriminates against women workers.

The 6-5 ruling by the 9th Circuit U.S. Court of Appeals on Monday exposes the retailer based in Bentonville, Ark., to billions in damages if it loses the case at trial. The lawsuit was filed in 2001 and includes more than 1 million current and former workers.

The lawsuit alleges that Wal-Mart pays women less then men for the same jobs and that female employees receive fewer promotions and have to wait longer for those promotions than male counterparts.

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Caterpillar results give stocks an early lift (AP)

Monday, April 26th, 2010 | Finance News

Stocks edged higher in midday trading Monday after Caterpillar Inc. joined other companies in reporting more signs of an improving world economy.

The heavy equipment maker, whose results are seen as an economic indicator, reported earnings that beat analyst expectations after a charge related to health care. The company also said economic conditions are "definitely improving" and that orders are significantly higher than last year.

Caterpillar's shares soared $3.26, or 4.7 percent, to $72.04 in midday trading.

Investors also got some good news from Whirlpool Corp., which said profits doubled on higher sales of appliances in the U.S. and other countries. That's a signal that consumer spending is picking up.

News of an acquisition by car rental company Hertz Global Holdings Inc. also helped push the market higher.

The Dow Jones industrial average rose 36.95, or 0.3 percent, to 11,241.23. The Standard & Poor's 500 index rose 0.95, or 0.1 percent, to 1,218.23, while the Nasdaq composite index gained 1.96, or 0.1 percent, to 2,532.11.

Investors were still being cautious, however. A series of upbeat earnings reports have sent stocks steadily higher over the past week, and many analysts believe that strong corporate earnings results are already priced into the market.

Peter Cardillo, chief market economist at the brokerage Avalon Partners Inc. in New York, said the market is "perhaps defying logic at this point, and nevertheless moving up."

"We will be headed for some sort of a pullback, which could happen at any time," Cardillo said, adding he doesn't think it will be too steep, maybe 5 percent to 7 percent. "For the moment, the enthusiasm continues."

This week will bring a stream of earnings news from companies across a range of industries, including Ford Motor Co., Exxon Mobil Corp. and UPS Inc. Consumer products companies including Procter & Gamble Co. and Colgate Palmolive are also scheduled to release their results.

Investors also got some reassurance about Greece's debt problems. The Greek government on Friday said it wanted to tap a rescue package from 15 European countries and the International Monetary Fund.

Market participants have been concerned that Greece could default on its debt and that the trouble there would spread to other countries.

Deal news also helped lift share prices. Hertz, the world's largest car rental company, agreed to buy rival Dollar Thrifty Automotive Group for almost $1.2 billion in cash and stock.

Shares of Hertz shot up $2.36, or 18.3 percent, to $15.24, while Dollar Thrifty's shares rose $3.48, or 9 percent, to $42.33.

Gold edged higher, while the dollar was modestly higher.

Oil prices were slightly lower.

Bond prices rose. The yield on the benchmark 10-year Treasury note fell to 3.80 percent from 3.82 percent late Friday.

The Russell 2000 index of smaller companies rose 3.38, or 0.5 percent, to 745.30.

In European trading stocks are higher in reaction to Greece's request for rescue funds. The FTSE-100 in London rose 0.6 percent. The CAC 40 index in Paris rose 1.1 percent.

Earlier, stocks closed higher in Tokyo. The Nikkei 225 average rose 2.3 percent.

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