Caterpillar Reports First Loss Since 1992

Caterpillar, the world's largest maker of construction equipment, this morning reported its first quarterly loss since 1992.

The Peoria, Ill.-based maker of bulldozers, graders and other big yellow machines was pulled into the red by a jaw-dropping $558 million in charges related to massive waves of layoffs and cost-cutting. The company laid off 25,000 workers in recent months.

Cat posted a first-quarter loss of $112 million, or 19 cents a share, compared with a profit of $922 million, or $1.45 a share, in the same quarter last year.

More alarmingly, the company cut its 2009 guidance by half.

It's hard to know whether today's news is a leading or lagging indicator. If it's a leading indicator -- and the company truly sees less construction spending going forward -- that means the recession probably will drag on.

If it's a lagging indicator, that means the company has absorbed most of its cost-cutting expenses (Yes, it seems odd that cost-cutting measures should *cost* money, but companies have to pay severances when they let their people go.) and is leaner and poised, perhaps, to take advantage of President Obama's "shovel-ready" stimulus projects.

To this end, if you remove all the charges related to Cat's cost-cutting, the company actually beat Wall Street expectations for the quarter.

Jim Owens, Cat's chief executive and chairman, said the rate of decline in Cat's market seemed to be moderating but global economic uncertainty remains high.

-- Frank Ahrens
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