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Shares of global conglomerate Caterpillar Inc. fell 2.5% in pre-market trading Friday after the company posted earnings per share that trailed analyst estimates and lowered its full-year outlook, partially due to weakness in the U.S. housing market. Net income climbed 20.5% to $927 million ($1.40/share) on sales of $11.4 billion (+8%), from $769 million ($1.14) on sales of $10.52 billion in Q3 2006. Analysts had estimated earnings of $1.42/share on sales of $10.9 billion. The company said it expects machinery and engines sales outside North America to gain 25% y/y ($4.6 billion), more than offsetting a $2.5 billion, 12% drop in North America. "Despite weakness in U.S. markets... we continue to see remarkable growth outside of the United States with particular strength in key industries like mining, oil and gas, electric power and marine engines. The industries we serve are becoming increasingly global, and the investments we are making to achieve our 2010 goals have us well positioned to meet their needs," CEO Jim Owens said in a statement (full earnings call transcript later today). Caterpillar lowered its full-year earnings guidance to $5.20-5.60, from a previous $5.30-5.80 forecast. For 2008, it gave a preliminary outlook of a sales and revenues increase of 5-10% and EPS increase of 5-15% from the mid-point of the 2007 outlook range. "We continue to believe CAT is one of the best ways to play the global infrastructure spend as shares represent a compelling investment for long term investors," Credit Suisse analysts told investors in an Oct. 12 note. "CAT will likely provide conservative 2008 guidance next week and the market will likely overreact. As such, in the event of pullback, we would encourage investors to use this as a buying opportunity."

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Source: Caterpillar Misses Estimates, Guides Down