ASV's Woes May Go Beyond a Sluggish Housing Market -- Barron's

Excerpt from our One Page Barron's Summary (receive it weekly by email by signing up here):

Digging Itself a Big Hole by Mark Veverka

Highlighted companies: A.S.V. Inc. (ASVI), Caterpillar Inc. (CAT), Ingersoll-Rand Co. Ltd. (IR)
Summary: Since 2002 A.S.V. Inc. (ASVI) rode the housing and construction boom with booming sales of its rubber-tracked mini-loaders that compete against Ingersoll-Rand Co. Ltd.'s (IR) well-known Bobcats; sales increased 120% in 2003 and 67% in 2004, and share prices reacted accordingly. Now the cooling U.S. housing market is taking its toll; Tuesday it reported a 34% drop in earnings ($5.1M $0.19/share) and lowered year-end guidance. Shares have fallen from January highs of $30+ to $14.50. Rising inventories have hurt ASV: they jumped over 50% in 2005 and are still climbing. A $5-6M windfall sale to clean up Katrina and other storms kept inventories from going through the roof, but at the same time painted a false picture of economic strength for investors. Industrial equipment giant Caterpillar Inc. (CAT) owns almost 25% of ASV, but has added to its woes by recently negotiating a five-year "margin-crimping" contract for the rubber-belt carriages it buys from ASV. CEO Dick Benson: "The negative news surrounding housing is definitely having an impact on dealer psychology." Barron's: That's no doubt true, but the company's problems seem to go beyond a sluggish housing market.
Quick comment: Jim Cramer likes ASV at current depressed prices, giving it "two thumbs up." Seeking Alpha housing market analysis: Housing Is Just Starting To Roll Over • The Mainstream Media Wakes Up to Housing's "Decline in Appreciation" • Housing Sector Recession Will Last a While, Won't Cause Full Blown Recession • No Bottom Seen in Housing Market • Don't Let the Housing Spinmeisters Mislead You