CAT 3Q up, but full year cut

Caterpillar Inc. said Friday its third-quarter earnings rose 21 percent, but the company, one of the world's largest construction equipment makers, cut its full-year profit forecast.

Caterpillar shares fell 4 percent on the news.

The Peoria, Ill.-based company earned $927 million, or $1.40 per share, compared with $769 million, or $1.14 per share in the year-ago quarter.

Revenue increased 9 percent to $11.44 billion, from $10.52 billion in the prior-year period. The company said strength in integrated services, which is its business that combines financial services, parts, logistics and other operations, offset a weak North American market for heavy equipment and engines.

"Continued growth in our global business has compensated for the weaker U.S. housing industry," Caterpillar Vice President Kent M. Adams said.

Analysts were expecting a profit of $1.43 per share on revenue of $11.19 billion, according to a Thomson Financial poll.

"They're experiencing cost pressures, and I think just the housing markets are a little bit worse than people had expected," Morningstar analyst John Kearney said.

The company's truck-engine sales were also off, but that was expected, he said. Trucking companies bought heavily the past two years ahead of new emission restrictions in place this year.

Caterpillar's results were held up by their strong international presence — more than half their sales are overseas — and their services business.

The latter generated over a third of the company's revenue.

That surprised Kearney, who said the figure was about 15 percent a year ago.

Analysts said they weren't too surprised Cat's results missed Wall Street's mark, nor by what the company expects in the months ahead.

"But stock reaction could be negative," Andrew Casey of Wachovia Capital Markets wrote in a note to investors.

That proved true in Friday morning trading.

Caterpillar shares fell 4 percent, or $3.14, to $74.52 in early trading.

For the full-year, Caterpillar expects to earn $5.20 to $5.60 per share, compared with previous guidance of $5.30 to $5.80 per share.

The company still anticipates revenue of about $44 billion.

Analysts polled by Thomson Financial expect a profit of $5.44 per share on revenue of $44.41 billion.