Stock Futures Turn Lower on Caterpillar Earnings Huge Gap Down 5.33% Pre-Market

Date: 7/22/20111

Stock Futures Turn Lower on Caterpillar Earnings Huge Gap Down 5.33% Pre-Market (CAT)CAT Caterpillar misses by $0.26, beats on revs; guides FY11 including the Bucyrus acquisition: EPS below consensus, revs above consensus (111.60 )Reports Q2 (Jun) earnings of $1.52 per share, including the Bucyrus acquisition, $0.26 worse than the Capital IQ Consensus Estimate of $1.78; revenues rose 36.7% year/year to $14.23 bln vs the $13.55 bln consensus. Co issues mixed guidance for FY11 including the Bucyrus acquisition, sees EPS of $6.25-6.75 vs. $7.13 Capital IQ Consensus Estimate; sees FY11 revs of $56-58 bln vs. $55.85 bln Capital IQ Consensus Estimate.

"Our 2011 financial results will include about a half year of Bucyrus results and most of the up-front and integration costs related to the acquisition. We expect that Bucyrus will add about $2 bln of sales in 2011 and negatively impact full-year profit by about $0.50 per share... Excluding the impact of Bucyrus, we are raising expectations for 2011, with sales and revenues in a range of $54-56 bln and profit per share of $6.75 to $7.25. That is an improvement from our previous outlook of $52-54 bln of sales and revenues and profit per share of $6.25 to $6.75.

While the economic recovery in the United States continues to be weaker than many expected, we're forecasting continued moderate economic expansion. That, coupled with stronger growth in the developing world, is driving higher sales for Caterpillar. There's been quite a bit of concern in the media over the past few months centered on China.

While we've seen some softening of growth in China, dealer deliveries to end users were up in the second quarter of 2011 compared with the second quarter of last year and grew at a faster rate than the overall industry in China. In our view, China is doing a good job of balancing growth and inflation, and our expectations for China remain positive. That said, we can't lose sight of the significant growth that's going on around the world outside the United States and China. Economic activity and our business in Latin America, the Middle East, Africa, CIS and greater Asia are robust."

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