Caterpillar gets plowed

January 18, 2001: 1:25 p.m. ET

Equipment maker beats 4Q estimates but warns on 2001; shares take a fall

NEW YORK (CNNfn) - Shares of heavy equipment maker Caterpillar Inc. fell as much as 11 percent Thursday after warning that earnings will fall and sales will be little changed this year because of the slowing U.S. economy and increased competition.

Caterpillar shares posted their biggest drop in more than three months after the company said its profit will be 5 percent-to-10 percent below what it earned in 2000. Analysts had anticipated earnings to rise this year. In mid-afternoon trading, shares of Caterpillar (CAT: Research, Estimates) shares fell $2.94 to $41.69; earlier the shares touched $40.

The profit revision came as Caterpillar reported fourth-quarter net income rose a higher-than-expected 10 percent. Caterpillar's profit had dropped seven out of the last nine quarters as higher interest rates, low commodity prices and weak overseas economies that diminished its overall sales.

"We expect 2001 to be another challenging year for our industry," Chairman and CEO Glen Barton said. "In general, many of the markets we serve will continue to be cyclically depressed with excess capacity and ongoing price pressure."

In the latest quarter, Caterpillar earned $264 million, or 76 cents a share, up 10 percent from $239 million, or 67 cents a share, a year earlier. The results topped the 64-cents-a-share forecast of analysts surveyed by earnings tracker First Call.

Revenue rose marginally to $5.11 billion from $5.02 billion.

Still, the Peoria, Ill.-based company said earnings for 2001 will be 5 percent to 10 percent below what it earned in 2000. Caterpillar was forecast to earn $3.42 a share this year, according to First Call.

For the full year, Caterpillar earned $1.05 billion, or $3.02 a share, up from $946 million, or $263 a share, in 1999. Revenue rose to $20.12 billion, up 2 percent from the $19.7 billion it made in 1999.