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Caterpillar reported a 2.9% decline in net income to $816 million, due to higher core operating costs, a higher tax rate and other one-off items. EPS however, came in at $1.23 (vs. $1.20 last year), well ahead of analysts' average estimates of $1.08 (Bloomberg) to $1.09 (Thomson), as it had 34 million fewer shares outstanding. Revenues rose 7% to $10.02b, topping the Street's consensus estimate of $9.12b. Caterpillar-CAT-chart-04-19-07 These were record results for Caterpillar, despite "severe weakness" in N. American on-highway truck engines and U.S. housing-related markets. Caterpillar predicts the Fed will cut interest rates by 0.5% and sees weak U.S. housing starts of 1.5m in '07. Still, based on worldwide strength, Caterpillar upward revised both its full-year '07 EPS and sales guidance to $5.30 - $5.80 (from $5.20 - $5.70) and $42b - $44b (from $41.5b - $43.6b), respectively. Analysts were expecting $5.46/share on sales of $39.87b. Shares of Caterpillar last traded at $72.55 (+5.7%) in the pre-market on volume approaching 500,000 shares. It lost 1.1% to $68.62 in normal trading yesterday.

Sources: Press release [i, ii], Bloomberg, MarketWatch
Commentary: Housing Slowdown Hitting Other Industries With a LagKomatsu: The Japanese Caterpillar
Stocks/ETFs to watch: Caterpillar (NYSE:CAT). Competitors: CNH Global NV (NYSE:CNH), Komatsu (OTCPK:KMTUY), Volvo AB (VOLV). ETFs: DIAMONDS Trust, Series 1 (NYSEARCA:DIA), Industrial Select Sector SPDR (NYSEARCA:XLI), PowerShares Dyn Building & Construction (NYSEARCA:PKB), iShares Dow Jones US Industrial (NYSEARCA:IYJ)

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Source: Caterpillar Shares Spike On Beat and Raise Quarter