Sage of Sugar Land

Why Chicago Bridge & Iron Is Cheap

You are probably right. CBI could see a nice bounce back over the next couple of years. But fundamentally I have concerns. Management has made a slate of acquisitions/mergers--... Howe-Baker, John Brown (UK), and most recently ABB Lummus. It is not easy in this industry to amalgamate the different "cultures" these newcomers bring, and the company is far from firing on all cylinders.

Add to this management short sight in trying to gain market share in the LNG Terminal business at the cost of margins--in fact, as we have seen, both UK projects have accumulated huge losses--both in money and in reputation, due to the large delays.

The balance sheet is anything but pristine. The Sep 08 report shows short term liabilities exceeding short term assets by over $850 million--larger than the company's current market cap.

There is probably money to be made--but this company is not for the cautious investor.