Caterpillar | Rebel Traders - Stock Market and Economic Analysis

Earnings losses season is picking up steam and the growing trend is the announcement of more job cuts.

Sprint:

Sprint Nextel Corp (S) To reduce labor costs by about $1.2B, to cut 8K jobs (about 13.3% of workforce)

- Co will take actions in the first quarter of 2009 to reduce internal and external labor costs by approximately $1.2B on an annualized basis.
- The actions include the elimination of approximately 8K positions within the company, which is expected to be largely completed by March 31. The positions to be eliminated will impact all levels of the company, and the impact on geographic locations will vary.
- The reduction total includes approximately 850 positions expected to be eliminated under a voluntary separation plan started late last year.
- The company expects to recognize a charge in excess of $300M in the first quarter of 2009 for severance and related costs associated with the reduction.
- Will extend pay increases through 2009, suspending 401(k) match programs and tuition reimbursement for 2009

Caterpillar:

Caterpillar Inc (CAT) Reports Q4 $1.08 v $1.31e, R $12.9B v $12.8Be; cutting 20K jobs (about 20% of global workforce)

- Guides FY09 EPS $2.50 v $4.32e, Rev “plus or minus 10% from $40B” v $47.2Be (implying $36-40B)
- Believe 2009 will be the weakest year for economic growth in the post-World War II period, but sees US as the first major economy to pull out of recession, sometime in second half of 2009.
- CAT Financial write-offs, net of recoveries, for the year ended December 31, 2008, were $121M (0.48% of average retail portfolio) compared to $68M (0.31% of average retail portfolio) for the year ended December 31, 2007. The increase in write-offs is primarily attributable to North America.
- CEO: “Fourth-quarter costs included transitional expenses as we moved to lower volumes and initiated production cuts. In addition, Financial Products results were impaired by financial market turbulence. It is now clear that we need to sharply lower our production and costs, and aggressive actions were triggered in December.”

Caterpillar CEO says “sees US as the first major economy to pull out of recession, sometime in second half of 2009″. Also this morning the CEO of General Electric (GE) had the following to say “emerging economies will ‘kick us out’ of economic slump”. Ok guys, which is it? The U.S. will lead the world out of the global recession or the emerging markets?

More CEO’s trying to ‘pump’ what is in ‘their’ best interest. What is in OUR best interest? Capital preservation and be prepared for a recession that lasts far longer than the CEO’s and Government economists claim. Remember that back in early 2008 many were calling for a turn around in the second half of 2008… that turned out well (sarcasm).

In early 2008 I told you that this recession would get much worse and last much longer than the talking heads were telling you.

Rebel Traders - Stock Market and Economic Analysis

Party Pooper Charts

Sprint And Caterpillar – Significant Job Cuts

Receive RebelTraders via Email

Readers of RebelTraders receive a FREE 5 day guest pass.

Recommended Sites