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China’s stimulus plan beats Obama’s, Caterpillar says

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Heavy-equipment manufacturer Caterpillar Inc., which today reported its first quarterly loss in 16 years, says it prefers China’s economic-stimulus plan to President Obama’s.

From Bloomberg News:

‘The infrastructure portion of the [U.S.] stimulus package was disappointing in that it was less aggressive than other countries and missed an opportunity to correct past underinvestment in U.S. infrastructure,’ Caterpillar said in an economic commentary with today’s first-quarter earnings report. CEO Jim Owens is a member of the president’s Economic Recovery Advisory Board. Obama visited the company’s Peoria, Ill., headquarters Feb. 12, the final day of his campaign to press for congressional passage. ‘You can measure America’s bottom line by looking at Caterpillar’s bottom line,’ Obama said during the February visit. ‘What’s happening at this company tells us a larger story about what’s happening in the American economy.’

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Caterpillar said it lost $112 million, or 19 cents a share, in the first quarter, compared with a profit of $922 million, or $1.45 a share, a year earlier. Revenue was $9.2 billion last quarter, down 22% from a year earlier.

The company said it still expected to be profitable for the full year. It predicted earnings of about $1.25 a share, excluding severance expenses and other one-time costs. But the new estimate is half what the firm projected in January.

Cat’s shares were up 91 cents to $31.40 at about 10 a.m. PDT, after diving 5.6% in Monday’s broad market decline.

From Bloomberg:

The company attributed the lower forecast in part to uncertainty about stimulus plans and said the effect of U.S. measures would be ‘fairly limited.’ Caterpillar said the U.S. may disburse as much as $70 billion this year for infrastructure building, about 6.5% of last year’s total construction spending. ‘We do not expect this increase to offset steep declines in private construction spending,’ today’s statement said.

At the same time, the company said it did expect some benefit this year from China’s economic-stimulus package.

‘China, with an economy one-third the size of the United States, is allocating over three times as much for infrastructure,’ Caterpillar said. ‘Initial results from this package look promising.’

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-- Tom Petruno

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