American International Group (NYSE: AIG) shareholders -- former AIG director, Eli Broad, and two fund managers , who together control about 4% -- are asking for changes to the management and board of the world's largest insurer, which has been struggling with the fallout of the subprime mortgage mess.
Caterpillar Inc. (NYSE: CAT) said it will spend $1 billion over the next two years to expand capacity in five of its Illinois factories, and will shift production at some of its plants to address the demand for machines used mostly in mining and large infrastructure projects. Also, CAT and Navistar International Corp. (NASDAQ: NAVZ) will begin cooperating to pursue new on-highway truck business and cooperate on an variety of engine platforms.
Starbucks Coffee Co. (NASDAQ: SBUX) said Thursday that it has reached a licensing agreement with SSP to open coffee retail stores in more than 150 airports and train stations in Europe. Financial terms were not disclosed.
Alcoa Inc. (NYSE: AA) said its Australian operations declared force majeure under supply contracts because an explosion at a gas supplier slowed production. Alcoa said the disruption will likely lower second-quarter earnings by 2 cents to 3 cents a share. Also, JP Morgan downgraded Alcoa from Overweight to Neutral, saying the company will not be a takeover target.
Bloggers, investors and Apple Inc. (NASDAQ: AAPL) weren't just interested in the new 3G iPhone unveiled Monday. Many of them commented on the appearance of CEO Steve Jobs and voiced concerns for his health, saying he was gaunt-looking. While a spokeswoman said Jobs was hit with a common bug, many are worried since Jobs was diagnosed with a rare form of pancreatic cancer four years ago, for which he underwent surgery that Apple said was successful.
Caterpillar (NYSE: CAT) was awarded a $397.1 million contract from the U.S. Army for two types of dozers with armor kits. The contract has one five-year option. Work is expected to be completed by 2018. Caterpillar is also holding its annual meeting today.
Donaldson Company (NYSE: DCI) manufactures filtration systems. The Engine Products segment makes air intake, exhaust and liquid filtration systems for the construction, industrial, mining, agriculture and transportation markets. The Industrial Products segment provides dust, fume, and mist collectors and air filtration systems used in industrial gas turbines, computer disk drives and manufacturers' clean rooms. Caterpillar (NYSE: CAT) accounts for over ten percent of Donaldson's sales.
The company surprised investors last week, when it reported fiscal Q3 EPS of 57 cents and revenues of $587.8 million. Analysts had been looking for 51 cents and $540.4 million. Management also guided FY08 EPS to $2.08-$2.13, versus consensus of $2.07. Donaldson said it expects full-year industrial product sales to grow by 17-19%. Engine product sales were seen growing 11-13%.
Jefferies & Co reiterated its "buy" rating on BioMarin (NASDAQ:BMRN) ahead of its analyst meeting, according to the AP.
Oppenheimer downgraded Motorola (NYSE:MOT) to "underperform" from "perform" according toBriefing.com. The news service also reports that Lehman upgraded Northwest (NYSE:NWA) from "equal weight" to "overweight".
Readers of this space know that my investment bias is toward large-cap companies with demonstrated business models that have a competitive advantage in established markets, preferably with a favorable global trend as a support. And with the aforementioned in mind, Caterpillar is worth a review.
Caterpillar (NYSE: CAT) is the world's No. 1 manufacturer in earth moving equipment and a leader in construction/agricultural equipment.
In general, analysts see CAT's 2008 revenue increasing 7-10% on strong international growth; North American revenue is expected to be flat.
Analysts also like the fact that Caterpillar is well-positioned to secure new business in emerging market economies for construction, infrastructure and land development work.
MOST NOTEWORTHY: GFI Group, Wells Fargo and Cirrus Logic were today's noteworthy downgrades:
Goldman downgraded GFI Group Inc (NASDAQ: GFIG) to Neutral from Buy following the company's announcement that credit chief, Donal Fewer, left the company to go to a rival firm and that about two dozen brokers may defect to follow him.
Oppenheimer cut Wells Fargo & Company (NYSE: WFC) to Underperform from Perform as they believe the company is under-reserved by at least $4.5B and that there is significant room for multiple contraction.
Cirrus Logic Inc (NASDAQ: CRUS) was downgraded at Jefferies to Hold from Buy on valuation, as they believe the risk/reward is no longer favorable at current levels.
The mood this week has changed sharply from the post-GE disappointment, despite weak economics still hitting the screens every morning in economic numbers. In fact, the week went much better than it was looking on Monday, and everyone remembered the old chant, "markets climb up a wall of worry." Even oil heading above the $116 per barrel isn't killing things. Here are unofficial closing levels:
Advanced Micro Devices Inc. (NYSE: AMD) down after reporting a net loss of $358 million on $1.5 billion in revenues. Losses were narrowed from the same quarter last year. The company also released plans to cut additional cost. If insiders want that stock to go up, they need to fire Hector Ruiz. Shares were down 1.6% at $6.09 going into the close.
After hitting a one-year low of $53.75 last May, the stock hit a one-year high of $94.77 in January. DE opened this morning at $91.00. So far today the stock has hit a low of $91.00 and a high of $94.80. As of 11:40, DE is trading at $94.10, up $4.66 (5.2%). The chart for DE looks neutral and improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $72.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just two months as long as DE is above $72.50 at June expiration. Deere would have to fall by more than 23% before we would start to lose money. Learn more about this type of trade here.
DE hasn't been below $75 since November and has shown support around $80 recently. This trade could be risky if energy costs fall off some, since that would lower the demand for agricultural accessories, but even if that happens, this position could be protected by the support the stock might find from its 200 day moving average, which is currently around $77 and rising.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in DE or CAT.
Shares of heavy equipment and engine manufacturer Caterpillar Inc. (NYSE: CAT) have been soaring in morning trading after the company reported a growth of 13% for its first-quarter profit, helped by strong international sales. The company offered the perfect example of the international growth importance.
The company said its quarterly profit surged to $922 million, compared with $816 million a year earlier, boosted by strong global gains that offset weakness on highway truck markets in North America. Caterpillar posted earnings $1.45 per share, exceeding analysts' forecast for a quarterly profit of $1.33 per share.
Total sales for the company rose by a respectable18% year over year to $11.8 billion, beating analysts' expectations by $1 billion, according to Thomson Financial. This was mainly because the heavy equipment maker benefited from a rise of 30% in international sales, while North America revenue came with a small increase of only 4%. The results proved continued weakening in North America, where sales have been under pressure from the sluggish economy, but strength internationally where the weak dollar lifted the company's sales.
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U.S. futures are up this morning despite news of another bad quarter from Citigroup (NYSE: C). The financial services giant this morning reported a Q1 loss of $5 billion, or $1.02 per share, following $12 billion in write-downs on mortgage-related securities and leveraged buyout loans. Analysts had expected better figures but the market apparently took heart that they weren't worse.
There were some good earnings reports for the bulls this morning. Dow 30 component Caterpillar Inc. (NYSE: CAT) earned $1.45 per share on revenues of $11.8 billion in the first quarter, beating estimates of $1.33, and projected strong full-year revenues and earnings. The company did foresee continuing weakness in the U.S. economy but remains somewhat upbeat on prospects for the global economy.
Honeywell International Inc (NYSE: HON) said its Q1 earnings rose more than 22% on strong demand from the aviation and commercial construction sectors. Honeywell earned $643 million, or 85 cents per diluted share, compared with $526 million, or 66 cents a share, a year ago. Xerox is also due to report before the markets open.
Google (NASDAQ: GOOG) reported a 30% increase in Q1 profit after the close Thursday, beating expectations by more than 30 cents a share. Its revenues were up 42%, to $5.19 billion, over the same period last year. Google's shares soared 17% in an after-hours "relief rally."
Thursday markets were flat on a day of mixed earnings reports, with Merrill Lynch disappointing, but IBM beating estimates. The Dow Jones industrial average rose 1.22 points or 0.01%; the S&P 500 was up 0.85 point or 0.06%; and the Nasdaq Composite lost 8.28 points or 0.35%.
Earnings are to be reported Friday, April 18 by Caterpillar Inc. (NYSE: CAT). Any analyst concerns about the company's current earnings are focused upon the weakened construction trade and flagging demand for large trucks. However, analysts site the company's large and strong global footprint, along with capital advantages stemming from the depressed dollar, to buttress predictions that company earnings shall keep in step with the previous two quarters. Company sentiment is generally positive overall.
Analysts first quarter profit estimates for Caterpillar range mainly between 1.33 and 1.49 per share on revenue of $10.77 billion. These numbers would be in keeping with results from Q4 2007. The company seems to be holding up extraordinarily well under current economic conditions. Analysts forward outlook for Caterpillar seems positive yet guarded.
The Associated Press sites the opinion of Andrew Casey, analyst for Wachovia (NYSE: WB). He indicates that Caterpillar is improving the margin on it's engines business. Casey is quoted as stating "This should be a positive short-term catalyst for stock price action.''
I believe that steel and fuel prices have put a bit of extra drag on Caterpillar's earnings for the first quarter. I'll state my earnings prediction to be within a penny of 1.40, give or take.
Gary Sattler is a freelance blogger. He does not knowingly have interest in the companies mentioned in this blog post.
Zebra Technologies (NASDAQ: ZBRA) provides printers, supplies and software used to produce bar codes, text and graphics on labels, cards, receipts, tickets and tags. It also makes EPC-compatible radio frequency identification (RFID) smart label printers/encoders for firms required to comply with major retail and government mandates. The company's products are used by businesses and governments in over 100 countries around the world, including more than 90% of the firms in the Fortune 500. Major clients include AMR Corporation (NYSE: AMR), Caterpillar (NYSE: CAT) and Kimberly-Clark (NYSE: KMB).
The Street was surprised late last month, when the company reported Q4 EPS of 45 cents and revenues of $233.6 million. Analysts had been looking for 43 cents and $226 million. Management also guided Q1 EPS to 36-44 cents (42 cent consensus) and Q1 revenues to $238-$255 million ($232.78M consensus). The Board authorized the purchase of an additional three million common shares.
Before the bell: Futures higher after BUD offer, ahead of retail sales
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Here are some highlights from this past week's 
Shares of heavy equipment and engine manufacturer 
Earnings are to be reported Friday, April 18 by 
Mall vacancies and store closures at 28-year-high
Merrill seeks $6 billion from Bloomberg, Blackrock to finance asset write-downs
Cramer on BloggingStocks: 'Bailout' is not a dirty word
