CALDEIRÃO DE BOLSA

Caterpillar's 2nd-quarter earnings expected to rise despite soaring raw material costs
July 21, 2008: 03:38 PM EST


NEW YORK (Associated Press) - Caterpillar Inc., one of the world's largest heavy equipment makers, reports earnings for the second quarter Tuesday before the opening bell. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Machinery makers have benefited from increased global demand despite a faltering U.S. economy and dollar. But weaker demand for construction equipment in some markets, such as western Europe, and the soaring costs of steel and other raw materials have posed challenges.

During the quarter, Caterpillar announced plans to spend $1 billion over the next two years to expand five of its Illinois factories and shift production at some plants to meet demand for machines used mostly in mining and large infrastructure projects.

The Peoria, Ill.-based manufacturer also unveiled plans to expand in Asia. It plans to invest $200 million over four years to boost manufacturing in India, including the building of more off-highway trucks _ used for coal and other mining jobs _ engines and backhoe loaders, the country's most widely used construction machine. Caterpillar said it expects to build a facility in China to make hydraulic excavators.

Also during the quarter, the Defense Department awarded Caterpillar a five-year, $397.1 million contract to supply two types of dozers with armor kits to the Army. The contract has a five-year option, with the work due to be completed by 2018.

Meanwhile, Caterpillar and Navistar International Corp., a maker of diesel engines and trucks, announced plans to work jointly to produce on-highway trucks and engine platforms. They plan to develop, manufacture and distribute commercial trucks to select regions outside North America. The products would include a full line of medium and heavy-duty trucks.

BY THE NUMBERS: Analysts polled by Thomson Financial, on average, expect earnings per share of $1.54 on revenue of $12.69 billion. In the year-ago period, Caterpillar earned $1.24 per share on revenue of $11.36 billion _ a record for the second quarter.

In the first quarter of 2008, Caterpillar's earnings rose 13 percent to $1.45 per share, helped by stronger international sales, from $1.23 a year earlier.

ANALYST TAKE: FTN Midwest analyst Brian Rayle, who has a neutral rating on the stock, wrote in a recent note: "We believe the company's shares are fairly valued as weakness in several of its end markets continue to weigh on the company's performance."

WHAT'S AHEAD: Continued weakness in the North American construction and industrial markets, higher input costs and other factors may dampen Caterpillar's earnings, but CEO Jim Owens said in March that profit and revenue will climb in 2008.

In a June 13 note to clients, Longbow Research analyst Eli Lustgarten wrote, "the proposed alliance with Navistar and the realignment/restructuring of manufacturing will make any further operating margin expansion at CAT difficult over the next few years." He has a neutral rating on the stock.

"Caterpillar is uniquely positioned to service many of the components of the global infrastructure boom now well under way," Buckingham Research Group analyst Joel Tiss, who has an "Accumulate" rating on Caterpillar stock, wrote in a May 19 client note. "With steel prices rising, factories near capacity and economic growth deteriorating, we remain concerned about their ability to recover raw material cost increases."

STOCK PERFORMANCE: Shares fell nearly 6 percent to $73.82 during the quarter. Shares of Caterpillar have gained about 4 percent since the start of the year, and traded around $73.27 in late afternoon trade on July 21.

Nation's No. 4 bank cuts dividend, and insists it is adequately capitalized.

July 22, 2008: 7:16 AM EDT

NEW YORK (CNNMoney.com) -- Wachovia Corp. posted a nearly $9 billion loss for its second quarter Tuesday and slashed its quarterly dividend by five cents per share.

The nation's fourth-largest bank reported a net loss for the three months ended June 30 totaling $8.9 billion, or $4.20 per share, compared with a profit of $2.36 billion, or $1.23 per share, a year earlier.

Excluding a one-time charge related to "declining market valuations," the Charlotte, N.C.-based bank said it lost $2.67 billion, or $1.27 per share. Analysts polled by Thomson Financial, which typically excludes one-time items from their estimates, were expecting a loss of 78 cents per share.

Revenue fell 13.7% to $7.5 billion from $8.69 billion last year. That missed analysts' forecast of $8.37 billion in revenue.

Wachovia (WB, Fortune 500) has been the subject of much analyst scrutiny in the weeks leading up to its report, most notably from influential banking analyst Meredith Whitney of Oppenheimer & Co. Whitney said the bank will face its "greatest reckoning" in the coming quarters due to surging credit costs.

The bank said late Monday that it plans to leave the wholesale mortgage lending business by the end of the week, no longer offering mortgages through brokers.

Wachovia's quarterly report follows those of peers Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500), JPMorgan (JPM, Fortune 500), and Wells Fargo (WFC, Fortune 500), all of whom reported hefty losses or declines in profit but still managed to beat analysts' expectations.