Caterpillar (CAT) will take a noncash impairment charge of $580M ($0.87/share) in Q4 after an...

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marpy Comments (297)
 
Shoddy accounting practices at a Chinese company! Should thids really surprise anyone!!!!
18 Jan, 06:53 PM Reply Like

Michael Clark Comments (7800)
 
Shoddy is a very nice word for 'graft', 'corrupt', 'criminal'. Yes. Chinese companies are not what we are told they are.
19 Jan, 11:35 PM Reply Like

marpy Comments (297)
 
Don't you think that inventory would have been an easy one to check had they done their homework?? with that much money involved it would be easy to see that the stuff just was not there????
20 Jan, 05:42 PM Reply Like

WhitneyB Comments (60)
 
Anything under $1B seems like a win in acquisition accounting debacles lately.
18 Jan, 07:23 PM Reply Like

Zach Tripp Comments (331)
 
great.... hope this is leading indictor or other hidden issues.

Regardless, I am buying at $80/share for $CAT.
18 Jan, 08:15 PM Reply Like

Ray Lopez Comments (1350)
 
Good call Zach!! And I eat at restaurants that had cockroaches and were closed last week by the health department. What are the odds of lightning striking twice?
20 Jan, 01:25 PM Reply Like

marketwatcher23 Comments (818)
 
people should watch the crazy eddie interview with capital account if they want to see where accounting fraud is these days.
18 Jan, 08:28 PM Reply Like

tikigod18 Comments (725)
 
At least they know the first rule of disbursing bad info...Friday afternoon before a long weekend@
19 Jan, 01:25 AM Reply Like

schatzl Comments (391)
 
So when the Chinese communist/totalitarian government whose existence relies in part on propaganda, announces 8% GDP growth, we can take it at face value? Sino-forest anyone? I'm not touching anything Chinese until the day we have a clear picture of what is really happening over there.

The Gweilo is there to be ripped off.
19 Jan, 05:12 AM Reply Like

MexCom Comments (2797)
 
Ouch! Could be a good but expensive learning experience in doing business in China. They need to do complete audits and inventory counts, check account balances, interview customers, check with government authorities, meet with grunt level employees, etc.
19 Jan, 06:43 AM Reply Like

Temperance Comments (8)
 
Been buying from China for fifteen years and nothing about it has improved. If I could buy USA made goods, I would. Unfortunately, we don't make them any longer. GMP? That is a joke if you expect, or rather, trust, to receive it in China even if it is part of the contract. I certainly understand the value of the huge new market of potential consumers, but I would rather not jeopardize the reputation of my company by having them manufacture my products.
19 Jan, 07:27 AM Reply Like

Transcend Asset Comments (501)
 
I'm not sure they can just check all of that themselves... unless they hire a private investigator and do it all under cover, I doubt they'll get real info much of the time. Many people can be bribed. Oh... CAT's coming to check on this blah blah blah... .here's the story to feed them.

Take a look at Sino-Forest if you haven't. That was a mess.

Hmmm... further to that thought, maybe US firms should hire Carson Block of Muddy Waters to research any company they want to buy since he has a track record of being able to find the accounting issues in many Asian companies.
20 Jan, 11:03 AM Reply Like

Ray Lopez Comments (1350)
 
The lessons were learned by corporate officers ages ago. The shareholders need to get schooled. As for feet on the ground interviews, do you think workers will risk their lives to tell you, a foreigner, the truth? Most won't rock the boat.
20 Jan, 01:27 PM Reply Like

Angel Martin Comments (1202)
 
Accounting issues = sell !
19 Jan, 12:34 PM Reply Like

june1234 Comments (929)
 
Anybody seen $600 M laying around?
19 Jan, 12:45 PM Reply Like

Nettligent Comments (635)
 
The driving force behind the deal was Ed Rapp, the former Caterpillar chief financial officer who now serves as a group president with responsibility for China, among other operations. It was Rapp who presented the deal to the board and Citigroup and lawyers pushed for its completion.
With their expertise and reputation, Citigroup, Freshfields Bruckhaus Deringer LLP, Blackstone and DLA Piper served as financial and legal advisers to Caterpillar on the transaction.
Stop blaming everything on Chinese. Without guidance and expertise from Master Crooks, these crimes are not possible.
19 Jan, 06:22 PM Reply Like

Ray Lopez Comments (1350)
 
Good call Nettligent. And now Rapp's not taking the rap but instead part of the Chamber of Commerce in Asia crowd. What a joke. Joke on CAT shareholders, as the agents will prosper from their bonuses.
20 Jan, 01:30 PM Reply Like

Bob de'Long Comments (608)
 
Just the tip of the iceberg. “Honest Chinese” is an oxymoron. Or maybe I should say only an occidental-moron believes Chinese numbers.
19 Jan, 06:43 PM Reply Like

Transcend Asset Comments (501)
 
Glad CAT was honest and willing to publicize the problem.

Though I'm Chinese, I would never buy a stock in a company that does most of its business in China. Glad I have stuck to this rule. I managed to avoid Sino-Forest.

I'd prefer investing in a blue chip Cdn or US company that is doing some business in countries like China, India, and Thailand. There's gold in them lands... but there is ALSO so much bribery going on and many middle men... too many layers for my comfort. So no direct investments for me.

I'd be ok with keeping CAT. It's a multinational corp. I'm quite certain it'll get through this bump. And have in place many procedures to avoid picking up another lemon in the future.
19 Jan, 09:41 PM Reply Like

RM13 Comments (565)
 
I don't invest in Chinese companies - who can't smell fraud there. And GDP growth reported by Chinese authorities is a made up number as well. One of these days the shadow game will be up and large part of Chinese banking system will be taken down in single swoop.
19 Jan, 11:54 PM Reply Like

tikigod18 Comments (725)
 
If you don't invest in companies that do business in countries like China, India, Thailand, etc., you are losing the chance to invest in some of the biggest and best, long term, dividend growth companies. Not just CAT, but look at KO, WMT, PEP, PM, PG, goodness, most large companies with growing dividends are growing them because of growth outside the US. Sometimes poor behavior is a condition of doing business. Everyone knows, and when they get caught, they pay whatever the price with a look of shock and a promise to never do it again; sort of like my 5th grader.

If you want to invest only in the US, I guess there are some REITS for you, but you sure miss out on a good diversified portfolio. WMT was accused clearly of massive bribery.....what happened to the stock?? It never looked back.
20 Jan, 09:44 AM Reply Like

schatzl Comments (391)
 
No doubt, but this counts for those investing in Russia too. Great opportunities - especially in regards to growth potential. However, those super low p/e values are low because fraud, non-existent minority shareholder rights, opaque business structures and practices, have been discounted.

Therefore, low p/e doesn't mean cheap. It means higher risk.

My mom always used to say: there are no free lunches.
20 Jan, 10:29 AM Reply Like

Transcend Asset Comments (501)
 
Interesting viewpoint on low P/E in developing/ 3rd world countries. Thanks for sharing!
20 Jan, 10:41 AM Reply Like

june1234 Comments (929)
 
In this that accounting snafu was 50% of CAT's 4th quarter earnings.
20 Jan, 09:16 PM Reply Like

Syr Comments (2)
 
Chart analysts should be very concerned about Cat even before this scandal. Stock opened the last trading day of year at 86.86 and closed at 89.61. It then gapped open the first trading day of the new year at 93.44 and closed at 93.50. Technicians appreciate that every gap has to be closed. On that basis it should test 89.61 without this bad fundamental news.
21 Jan, 08:28 AM Reply Like

lhjones Comments (2)
 
Great language.How did that get by?
21 Jan, 10:34 AM Reply Like