Obama Hype Too Late for OshKosh? Black and Decker Not Seeing Recovery

I'll keep repeating this weekly; the market is not cheap, and earnings estimates for 2009 are a complete hoax. I said the same thing in early 2008 about 2008 estimates... the world of Kool Aid has no bounds.

Now in a few hours you will hear the Gross Domestic Product (GDP) for Q4 2008. Aside from being yet another inaccurate government report that will revised multiple times...It will be horrific. You will be told "not to worry" - "it is backwards looking, of course it was bad because credit had frozen - it's getting better every day". "One more bad quarter - Q1 2009" and then "we have the second half 2009 recovery to look forward to, all this stimulus will fix it".

So as the pundits soothe your nerves, I'll be listening to the companies. As I look through numerous earnings reports in my quest to find the "soon to be here" turn in the economy; many of these stocks levered to "making things" are simply crumbling. Oshkosh (OSK) is one of those companies, and if not for orders from (who else) the bottomless pockets of the federal government, these guys would be toast. In fact, they are breaking bank covenants and might be toast either way.

Oshkosh Corporation designs, manufactures, and markets a range of specialty vehicles and vehicle bodies worldwide. The company�s Access Equipment segment offers aerial work platforms, telehandlers, scissor lifts, and vertical masts used in various industrial, institutional, construction, and general maintenance applications. Its Defense segment manufactures severe-duty, heavy, and medium-payload tactical trucks for the Department of Defense, including hauling tanks, missile systems, ammunition, fuel, and cargo for combat units. The company�s Fire and Emergency segment provides custom and commercial fire apparatus and emergency vehicles, including pumpers, aerial and ladder trucks, tankers, light and heavy-duty rescue vehicles, wildland rough terrain response vehicles, mobile command and control centers, bomb squad vehicles, hazardous materials control vehicles, and other emergency response vehicles.

Needless to say they pulled guidance, but that's not even the "fun" part... this was one of the Obama stocks - hey we're going to rebuild America; we need any and all of this company's Access Equipment - thesis! Buy Buy Buy!

• Specialty vehicle maker Oshkosh Corp. withdrew its 2009 financial guidance on Thursday, citing volatile demand and uncertain currency and commodity prices.
• The company also said it cut its work force by 7 percent, reduced production, announced facility closures and slashed spending to cope with the downturn. (but other than that, they look forward to the 2nd half 2009 recovery) Oshkosh said it lost $20.6 million, or 28 cents per share, for the quarter ended Dec. 31, compared with a profit of $37.3 million, or 50 cents per share, in the same quarter last year.
• The company reported a 40 percent decline in sales in its access equipment division and a 0.6 percent sales decline in its fire and emergency division. A bright spot was its defense segment, which saw a 37 percent jump in sales, helped by additional orders from the Department of Defense. (<---- completely immune to economic tsunami; bottomless taxdollar pockets)
• Oshkosh said business conditions have deteriorated more than predicted, and the company now expects to be in violation of "one or more" of its financial covenants under its credit agreement in the second fiscal quarter. The company said it is seeking an amendment to its credit agreement and expects to receive one in late February or March.

So how is business Mr. Bohn?

• During a conference call, Bob Bohn, the company's chairman and chief executive, said that during the most recent quarter, "orders virtually stopped in some markets and order cancellations nearly equaled new orders for access equipment in Europe. "This near drought in demand is unprecedented," Bohn said, "and has really caused us to reassess near-term expectations for our access equipment and commercial segments."

Well just hang in there - Obama is coming.

Onto Black & Decker (BKD) which we are all familiar with...

• Tool maker Black & Decker Corp (BDK) warned of a double-digit fall in organic sales for the first three quarters of 2009 on weakening demand, and said it would cut 1,200 jobs, sending its shares down 18 percent to a seven-year low.
• The company, which reported a better-than-expected fourth-quarter profit, said it expects first-quarter sales to drop about 20 percent on lower demand.
• Robert W Baird analyst Peter Lisnic, who termed the outlook "abysmal," said demand at the company's core segment, power tools, remained bleak. Sales at the segment fell 13 percent for the quarter... aid the company's cash generation ability was also diminishing.
• It might also change its dividend payout policy if the situation worsens, the company said.

I won't even bother touching Allstate (ALL) other than to ask... what the heck are our insurance companies doing? I thought they were here to ... provide insurance. Not be hedge funds. Not to worry - all insurance companies were up 20-30% Wednesday since the Bank of Our Grandchildren will soon house their sins.

• Shares of insurer Allstate Corp. fell more than 20 percent Thursday, a day after the company posted a loss of $1.13 billion for the fourth quarter and announced plans to cut 1,000 jobs. The property and casualty insurer posted a $1.13 billion loss for the quarter ending Dec. 31, as losses mounted in its investment portfolio. Excluding the investment losses, Allstate's operating income was $518 million, a 26 percent decline from the year-ago period as underwriting income fell.
• S&P on Thursday lowered its counterparty credit and financial strength ratings on two Allstate subsidiaries, Allstate Protection and Allstate Financial, to "AA-" from "AA."

Look forward to owning Allstate's "investments" in our future Bad Bank.

Disclosure: No positions