Dow dropped 25, decliners ahead of advancers almost 4-1 & NAZ was up only pennies, giving up early gains. The MLP index fell 2 to 258 & the REIT index dropped nearly 6 to the 286s. Junk bond funds were about 1% lower & Treasuries sold off. Oil fell
the most in more than a month as US output surged to a 22-year
high last week & Chinese manufacturing contracted more than estimated. Gold lost 13.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
![Live 24 hours gold chart [Kitco Inc.]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_suPM-CM71JRgr6_6K6GTuBYDRko8sNgAom1B7SxWxYsyq9h4V1ucCX1Wbevjo0I6dQEbL2X9TcTe1YbVAX8HnUfmMFel1AKlAXfruY=s0-d)
Photo: Yahoo
A global mining industry slump cut into Q2 earnings at Caterpillar, a Dow stock, as companies spent less on equipment & dealers cut inventories more than expected. CAT posted a 43% slide in earnings & cut its profit & revenue outlook for the year. EPS fell to $1.45, compared with $2.54 a year ago. Revenue slid 15.8% to $14.63B. The forecast called for EPS of $1.69 on revenue of $15.1B. Dealers cut inventories by $1B as the global mining industry slowed & growth slowed, especially in China. CAT also had currency translation & hedging losses. CEO Doug Oberhelman predicted improved profits during H2 as the company takes further cost-cutting measures. But it cut full-year EPS outlook from about $7 to $6.50 & revenue is now expected to come in at $56-$58B, down from previous guidance of $57-$61B. The company repurchased $1B worth of stock in Q2, & based on strong cash flow, expects to buy another $1B in Q3. The company said that production & profit margins won't pick up until mining companies begin ordering more equipment from dealers, who will then restock inventories. CAT cut its global full-time work force by more than 10K compared with Q2 of last year. It had 122K employees at the end of Jun. The temporary work force also dropped by 9K in Q2. Profit fell in each of the big divisions. Operating profit fell 61% to $550M in resource industries, which includes mining. It was down 47% to $362M for construction equipment, & down 3% to $955M in power systems, which makes items including large electrical generators & locomotive engines. The stock fell 2.08.
Caterpillar Cuts Forecast as Mining Equipment Demand Drops
Photo: Bloomberg
AT&T, a Dow stock & a Dividend Aristocrat, posted profit that fell just below the estimate as costs rose for smartphone discounts used to persuade more customers to sign long-term contracts. Q2 EPS was 67¢, leaving out one-time items. Analysts had estimated EPS of 68¢. Sales rose 1.6% to $32.1B, topping the estimate of $31.8B. Adjusted for the sale of a unit, revenue would have risen 2.6%. It added 551K contract customers, compared with 320K a year ago. Analysts had projected 499K. CEO Randall Stephenson has been unveiling new subscription plans for heavy internet users to catch up with the competition. While discounts helped pushed smartphone sales to a record, they reduced the wireless service profit margin to 42.4% from 45.8% a year ago & missed the 43.4% estimate. The average monthly wireless bill for contract customers was $66.12, beating the average estimate of $65.76. Landline revenue declined 0.9% to $14.8B, hurt by demand for traditional phone connections, especially among business customers. But the company added 233K U-verse TV customers to help make up for landline losses. The stock lost 41¢
AT&T Profit Misses Estimates as Smartphone Discounts Hurt Company Results
Photo: Bloomberg
PepsiCo, a Dividend Aristcorat, posted Q2 profit that topped estimates as it boosted prices & sales volumes. EPS rose to $1.28, from 94¢ a year earlier. EPS excluding some items was $1.31, ahead of the estimate of $1.19. The results may help CEO Indra Nooyi fend off pressure from Peltz’s Trian Fund Management to acquire cookie maker Mondelez Intl (MDLZ) or at least split the food & beverage units to boost value. PEP improved its beverage market share & sustained snack dominance in the US during the past year. “The risk of an $80 billion transaction and then trying to drive a lot of synergies out of that, taking on all the integration risks, we just don’t think it makes sense for PepsiCo shareholders,” CFO Hugh Johnston said. Sales rose 2.1% to $16.8%, matching the estimate. Global drink sales volumes, excluding the effects of acquisitions, divestitures & foreign-currency fluctuations, rose 1.5%, while snack sales volume on that basis advanced 3%. The stock lost 56¢.
PepsiCo Profit Tops Analysts’ Estimates as Peltz Seeks Breakup
Yesterday CAT warned & today it delivered the grim news which has wider implications. Its customers around the world are not purchasing as much of its equipment as it can sell. The global economy is not doing as well as rising stock markets indicate. Apple (AAPL) added 21 today, but there are plenty of questions about where its growth is going to come form. Dow & the S&P 500 are just inches away from their record levels which looks like a disconnect with the economic news reported.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.02% | |
U.S. 2-year |
0.35% | |
U.S. 10-year |
2.59% |
| CLU13.NYM | ...Crude Oil Sep 13 | ...105.39 |  ...1.84 | (1.7%) |
Photo: Yahoo
A global mining industry slump cut into Q2 earnings at Caterpillar, a Dow stock, as companies spent less on equipment & dealers cut inventories more than expected. CAT posted a 43% slide in earnings & cut its profit & revenue outlook for the year. EPS fell to $1.45, compared with $2.54 a year ago. Revenue slid 15.8% to $14.63B. The forecast called for EPS of $1.69 on revenue of $15.1B. Dealers cut inventories by $1B as the global mining industry slowed & growth slowed, especially in China. CAT also had currency translation & hedging losses. CEO Doug Oberhelman predicted improved profits during H2 as the company takes further cost-cutting measures. But it cut full-year EPS outlook from about $7 to $6.50 & revenue is now expected to come in at $56-$58B, down from previous guidance of $57-$61B. The company repurchased $1B worth of stock in Q2, & based on strong cash flow, expects to buy another $1B in Q3. The company said that production & profit margins won't pick up until mining companies begin ordering more equipment from dealers, who will then restock inventories. CAT cut its global full-time work force by more than 10K compared with Q2 of last year. It had 122K employees at the end of Jun. The temporary work force also dropped by 9K in Q2. Profit fell in each of the big divisions. Operating profit fell 61% to $550M in resource industries, which includes mining. It was down 47% to $362M for construction equipment, & down 3% to $955M in power systems, which makes items including large electrical generators & locomotive engines. The stock fell 2.08.
Caterpillar Cuts Forecast as Mining Equipment Demand Drops
Caterpillar (CAT)
Photo: Bloomberg
AT&T, a Dow stock & a Dividend Aristocrat, posted profit that fell just below the estimate as costs rose for smartphone discounts used to persuade more customers to sign long-term contracts. Q2 EPS was 67¢, leaving out one-time items. Analysts had estimated EPS of 68¢. Sales rose 1.6% to $32.1B, topping the estimate of $31.8B. Adjusted for the sale of a unit, revenue would have risen 2.6%. It added 551K contract customers, compared with 320K a year ago. Analysts had projected 499K. CEO Randall Stephenson has been unveiling new subscription plans for heavy internet users to catch up with the competition. While discounts helped pushed smartphone sales to a record, they reduced the wireless service profit margin to 42.4% from 45.8% a year ago & missed the 43.4% estimate. The average monthly wireless bill for contract customers was $66.12, beating the average estimate of $65.76. Landline revenue declined 0.9% to $14.8B, hurt by demand for traditional phone connections, especially among business customers. But the company added 233K U-verse TV customers to help make up for landline losses. The stock lost 41¢
AT&T Profit Misses Estimates as Smartphone Discounts Hurt Company Results
AT&T (T)
Photo: Bloomberg
PepsiCo, a Dividend Aristcorat, posted Q2 profit that topped estimates as it boosted prices & sales volumes. EPS rose to $1.28, from 94¢ a year earlier. EPS excluding some items was $1.31, ahead of the estimate of $1.19. The results may help CEO Indra Nooyi fend off pressure from Peltz’s Trian Fund Management to acquire cookie maker Mondelez Intl (MDLZ) or at least split the food & beverage units to boost value. PEP improved its beverage market share & sustained snack dominance in the US during the past year. “The risk of an $80 billion transaction and then trying to drive a lot of synergies out of that, taking on all the integration risks, we just don’t think it makes sense for PepsiCo shareholders,” CFO Hugh Johnston said. Sales rose 2.1% to $16.8%, matching the estimate. Global drink sales volumes, excluding the effects of acquisitions, divestitures & foreign-currency fluctuations, rose 1.5%, while snack sales volume on that basis advanced 3%. The stock lost 56¢.
PepsiCo Profit Tops Analysts’ Estimates as Peltz Seeks Breakup
Pepsico (PEP)
Yesterday CAT warned & today it delivered the grim news which has wider implications. Its customers around the world are not purchasing as much of its equipment as it can sell. The global economy is not doing as well as rising stock markets indicate. Apple (AAPL) added 21 today, but there are plenty of questions about where its growth is going to come form. Dow & the S&P 500 are just inches away from their record levels which looks like a disconnect with the economic news reported.
Dow Jones Industrials
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