DJIA 9141.84 -25.66 (-0.28%) S&P 500 1123.64 +0.92 (+0.08%) Nasdaq 1887.14 +20.54 (+1.10%) Value Line ndx 994.22 +1.67 (+0.17%) 30-Year Bond 102 26/32 -21/32 5.92% Yield
Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> rose $2 7/16 to $94 5/8 on anticipation of its third quarter earnings report to be released after Wednesday's close. Last month, the company said Q3 EPS would be about $0.04 higher than the analysts' mean estimate of $0.44, versus $0.40 for the year-earlier period, thanks to strong sales of business software. Even though analysts quickly revised their EPS estimates to a mean of $0.48, some now expect Microsoft to report even higher earnings. The company will broadcast its conference call live on the Web at http://www.events.audionet.com/
events/microsoft/q1earnings/ at 2:30 p.m. Pacific time (5:30 p.m. Eastern time). Separately, in an interview with Reuters Microsoft Executive Vice President Steve Ballmer said the PC market is still growing at about 15% despite the economic downturn in Asia. He said sales in the Mideast have increased 40% during the fiscal year 1998, which ends in June, and he expects the region to offer the fastest sales growth for the company in the next four to five years.
Eli Lilly & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> gained $3 13/16 to $72 3/16 in heavy trading after the maker of the best-selling anti-depressant drug Prozac reported first quarter earnings of $0.47 per share (before charges) compared with $0.38 in the year-earlier period and a penny higher than the First Call mean estimate. Worldwide sales for the quarter increased 16% from a year ago to $2.269 billion, with Prozac (up 10%) and anti-psychotic drug Zyprexa (up 172%) leading the sales growth. Newer products accounted for 86% of overall sales growth, which is good news for investors worried that the company may be keeping too many eggs in one basket in the run-up to Prozac's patent expiration in 2001. In addition, preliminary reports (not yet released) indicate that Evista, launched in the first quarter as a treatment for osteoporosis, may also be effective in preventing breast cancer without increasing the risk of uterine cancer. Lilly also recently started a clinical trial to determine the ability of Evista to prevent heart attacks in women after menopause. Separately, Lilly won a court battle after the U.S. Supreme Court left intact a lower court ruling that dismissed a patent infringement suit in which the University of California sought royalties on a product that generated $936 million in revenue last year.
International Business Machines <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> moved higher in after-hours trading, gaining $3 1/2 to $111 1/4 as the company reported Q1 EPS of $1.06, a penny higher than the First Call mean estimate. Meanwhile, other PC makers rallied today after market research firm Dataquest said it expects PC shipments to increase 15.6% to 93.1 million units this year, thanks to the under-$1,000 PCs. The cheaper machines are expected to hold back sales growth, which is anticipated to rise just 6.4%. Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> gained $2 3/16 to $69 11/16, and Gateway 2000 <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTW)") else Response.Write("(NYSE: GTW)") end if %> jumped $2 3/4 to $50 3/4 as it also announced it will target the business market with a new division dedicated to building more formal ties to dealers. Micron Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %> added $1 1/4 to $29 1/2, while Hewlett-Packard <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> gained $15/16 to $64 3/8
QUICK TAKES: Semiconductor and semiconductor equipment companies also benefited from the bullish forecast for PC makers. Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> added $1 5/16 to $76 1/2; Applied Materials <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMAT)") else Response.Write("(Nasdaq: AMAT)") end if %> advanced $1 1/4 to $36 11/16; National Semiconductor <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NSM)") else Response.Write("(NYSE: NSM)") end if %> inched up $7/16 to $23 7/16; and Texas Instruments <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TXN)") else Response.Write("(NYSE: TXN)") end if %> rose $2 3/4 to $61 1/4... Cendant Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CD)") else Response.Write("(NYSE: CD)") end if %> rebounded $2 5/16 to $23 1/2 in the wake of the consumer services conglomerate's announcement last week of accounting irregularities. The company named a new CFO, Michael Wargotz, for its troubled Alliance Marketing division. After the close Friday, Cendant and American Bankers Insurance <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ABI)") else Response.Write("(NYSE: ABI)") end if %> also reaffirmed their commitment to their agreement for Cendant to acquire American Bankers, which was up $1 1/8 to $61 1/8.
Pfizer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %> jumped $7 7/8 to $113 1/16 after The Wall Street Journal reported that the pharmaceutical company's new impotence drug Viagra is "already one of the fastest-selling drugs in the history of medicine" after a mere two weeks on the market. Also, PaineWebber upgraded Pfizer to "attractive" from "neutral"... Several Internet companies regained ground today after retreating Friday. Netscape Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCP)") else Response.Write("(Nasdaq: NSCP)") end if %> recovered $2 1/2 to $25 9/16. Yahoo! Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> gained $4 1/4 to $125 3/4 as Donaldson, Lufkin & Jenrette started coverage of the Internet content aggregator with a "buy" rating and a target price of $150 per share. Rival Infoseek Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEEK)") else Response.Write("(Nasdaq: SEEK)") end if %> also added $2 1/2 to $39 3/16. K-tel International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KTEL)") else Response.Write("(Nasdaq: KTEL)") end if %>, which recently announced plans to launch an online music store in May, surged $12 15/16 to $41 5/8, and Online auctioneer Onsale Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ONSL)") else Response.Write("(Nasdaq: ONSL)") end if %> was bid up $1 3/8 to $29 3/4.
Western Digital <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WDC)") else Response.Write("(NYSE: WDC)") end if %> gained $1 1/4 to $19 3/4 as analysts continued to upgrade industry overlord Seagate <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEG)") else Response.Write("(NYSE: SEG)") end if %> and investors await the company's guidance in this week's conference call... Networking company Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> rose $1 13/16 to $72 1/4 and telecommunications software and systems designer Ciena Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CIEN)") else Response.Write("(Nasdaq: CIEN)") end if %> gained $2 7/8 to $48 1/2 after the companies announced an industry-wide initiative to create the Optical Internetworking Forum to focus on accelerating the deployment of optical internetworks... Chancellor Media <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMFM)") else Response.Write("(Nasdaq: AMFM)") end if %> jumped $3 3/4 to $47 as the radio broadcasting company announced that it has signed a new employment agreement with James de Castro under which he will continue to serve as COO with expanded responsibilities for at least the next five years.
MCI Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCIC)") else Response.Write("(Nasdaq: MCIC)") end if %> announced it will build two new routes on its high-speed telecommunications network using Lucent Technologies' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> enhanced TrueWave fiber, which sent Lucent up $2 1/8 to $71 1/2... Digital video compression company C-Cube Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CUBE)") else Response.Write("(Nasdaq: CUBE)") end if %> leapt $2 3/16 to $22 3/4 after announcing that Gateway 2000 has chosen its ZiVA DVD decoder with SecureView for the computer company's first DVD notebook computer... Qualcomm Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QCOM)") else Response.Write("(Nasdaq: QCOM)") end if %> rose $3 3/16 to $58 7/8 after signing an agreement by which Digital River will distribute the wireless communications and advanced electronic messaging solutions company's Eudora E-Mail software through Digital River's network of more than 100 online dealers... Pharmaceutical company Alza Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AZA)") else Response.Write("(NYSE: AZA)") end if %> added $2 1/16 to $50 9/16 after Merrill Lynch raised its rating on the company to near-term "buy" from "accumulate," while keeping its long-term "buy" rating.
Earnings Movers
Lexmark International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LXK)") else Response.Write("(NYSE: LXK)") end if %> up $11 1/4 to $59; Q1 EPS: $0.69 vs. $0.40 (before charges) last year; Estimate: $0.53
Boston Beer Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SAM)") else Response.Write("(NYSE: SAM)") end if %> up $2 3/16 to $12 7/16; Q1 EPS: $0.20 (before charges) vs. $0.08 last year; Estimate: $0.11
Borg-Warner Security <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BOR)") else Response.Write("(NYSE: BOR)") end if %> up $2 11/16 to $20 5/8; Q1 EPS: $0.03 vs. $$0.17 last year; Estimate: $0.09
Omega Research <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OMGA)") else Response.Write("(Nasdaq: OMGA)") end if %> up $1/2 to $5 5/8; Q1 EPS: $0.04 vs. $0.08 last year; Estimate: $0.02
CNF Transportation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CNF)") else Response.Write("(NYSE: CNF)") end if %> up $3 1/16 to $38 11/16; Q1 EPS: $0.33 vs. $0.40 last year; Estimate: $0.28
Univision Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UVN)") else Response.Write("(NYSE: UVN)") end if %> up $2 1/2 to $39 1/2; Q1 EPS: $0.00 vs. a loss of $0.03 last year; Estimate: a loss of $0.03
Atlas Air <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CGO)") else Response.Write("(NYSE: CGO)") end if %> up $2 1/4 to $38 11/16; Q1 EPS: $0.24 vs. $0.22 last year; Estimate: $0.20
First Consulting Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FCGI)") else Response.Write("(Nasdaq: FCGI)") end if %> up $4 5/8 to $23 3/4; Q1 EPS: $0.12 vs. $0.04 last year; Estimate: $0.08
Bell Microproducts <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BELM)") else Response.Write("(Nasdaq: BELM)") end if %> up $1 7/16 to $8 11/16; Q1 EPS: $0.02 vs. $0.27 last year; Estimate: $0.05
Century Aluminum Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CENX)") else Response.Write("(Nasdaq: CENX)") end if %> up $2 7/8 to $18; Q1 EPS: $0.29 vs. $0.09 last year; Estimate: $0.21
Remedy Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RMDY)") else Response.Write("(Nasdaq: RMDY)") end if %> up $3 11/16 to $25 1/16; Q1 EPS: $0.08 vs. $0.16 last year; Estimate: $0.06
ShowBiz Pizza Time <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHBZ)") else Response.Write("(Nasdaq: SHBZ)") end if %> up $4 7/8 to $37 7/8; Q1 EPS: $0.63 vs. $0.42 last year; Estimate: $0.53
Interneuron Pharmaceuticals <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IPIC)") else Response.Write("(Nasdaq: IPIC)") end if %> tumbled $7 1/8 to $7 15/16 after the biopharmaceutical company withdrew the new drug application (NDA) for its CerAxon stroke treatment in order to "obtain additional clinical data." A recent 100-patient trial using magnetic resonance imaging suggested the drug had no effect on the patients' neurological functions, the company said. It should be noted that Interneuron is the same company that marketed Redux, the anti-obesity drug that was pulled from the market last September over fears that it may cause heart valve abnormalities. During that month alone, the company's share price dropped a heart-stopping 37% to $12. The stock had recovered some ground recently after some positive news on the Redux front, but today's setback has once again knocked the wind from this one-time highflyer's sails.
Prison management company Corrections Corp. of America <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCA)") else Response.Write("(NYSE: CCA)") end if %> was handcuffed for a $3 5/8 loss to $29 7/8 after agreeing to merge with prison real estate investment trust CCA Prison Realty Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PZN)") else Response.Write("(NYSE: PZN)") end if %> in a stock swap valued at about $3.17 billion. Each Corrections Corp. share will be converted into 0.875 of a share of the REIT's stock. It was only nine months ago that CCA spun-off the REIT in a $413 million initial public offering. CCA was spun off in order to segment the ownership of the real estate from the actual management of the facilities, but a soft prison management market (Corrections Corp. saw a key Tennessee contract put on hold and a government reluctant to part with 94% of the prison management market) hurt the share price of Corrections Corp. while CCA shares soared. With the companies reunited as a REIT, management is telling investors that a combined firm (as a REIT) was really best all along, albeit segmented into three units to appease the IRS. Much of the justification for the reunion seems to revolve around the special tax status afforded to REITs, which analysts expect will knock off $50 million from the combined company's annual tax bill.
QUICK CUTS: Long-distance phone service giant AT&T Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> was disconnected for a $1 15/16 loss to $65 3/16 after reporting Q1 EPS from continuing operations of $0.80, beating the First Call mean estimate of $0.73. However, revenues increased by less than 1% to $12.6 billion compared to the same period a year ago... Automaker Ford Motor Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %> lost $1 7/16 to $47 3/8 after the Supreme Court denied the company's request to review a $2.5 million judgment awarded to two former Ford dealers who sued the company for misrepresenting its program for minority dealers... Building materials supplier Wickes Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WIKS)") else Response.Write("(Nasdaq: WIKS)") end if %> was nailed for a $2 loss to $7 7/8 after reporting a Q1 loss of $0.83 per share (after a $5.4 million restructuring charge) versus a $0.63 per share loss a year ago.
Hospital equipment purchasing outsourcing firm COHR Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CHRI)") else Response.Write("(Nasdaq: CHRI)") end if %> dropped $1 3/4 to $8 1/8 after an article in the latest edition of Barron's suggested the firm diverted funds that should have been rebated to hospitals. The company said a special review of the allegations by outside auditors showed that additional rebates to its hospital clients were not warranted... Chemicals, fibers, and life sciences giant Du Pont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %> fell $2 3/16 to $74 13/16 after CS First Boston downgraded the stock to "hold" from "buy"... Metals and chemicals manufacturer Synalloy Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYNC)") else Response.Write("(Nasdaq: SYNC)") end if %> slid $9/16 to $12 3/4 after reporting on Friday that Q1 EPS came in at $0.09, missing the $0.30 estimate by the single analyst surveyed by First Call.
Glens Falls, New York-based Evergreen Bancorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EVGN)") else Response.Write("(Nasdaq: EVGN)") end if %> wilted $1 7/8 to $28 1/4 after the company's board approved a shareholder rights plan on Friday aimed at discouraging takeovers of the company that "do not provide fair value to shareholders"... Guarantee Life Companies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GUAR)") else Response.Write("(Nasdaq: GUAR)") end if %> lost $1 3/16 to $26 13/16 after the insurer warned on Friday that its fiscal Q1 earnings will be "significantly below" the Street estimate of $0.46 per share... Arterial Vascular Engineering <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVEI)") else Response.Write("(Nasdaq: AVEI)") end if %> was clamped $1 13/16 to $35 3/4 after Avalon Research Group reiterated its "sell" recommendation on the developer of stents and balloons for angioplasty procedures... Computer assisted design (CAD) software developer Autodesk Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADSK)") else Response.Write("(Nasdaq: ADSK)") end if %> fell $1 1/8 to $45 1/8 after the company said its business practices are being investigated by the Federal Trade Commission.
Graphite and carbon electrodes maker UCAR International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UCR)") else Response.Write("(NYSE: UCR)") end if %> fell another $2 to $31 3/4 after reports surfaced on Friday that the company may seek bankruptcy protection due to its involvement in an alleged price-fixing scheme... Credit card transactions and receivables processor SPS Transaction Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PAY)") else Response.Write("(NYSE: PAY)") end if %> slipped $1 15/16 to $31 1/16 after agreeing to merge with consumer and commercial financing firm Associates First Capital Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AFS)") else Response.Write("(NYSE: AFS)") end if %> in a deal valued at about $896 million... Broadband data transmission semiconductor manufacturer Broadcom Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BRCM)") else Response.Write("(Nasdaq: BRCM)") end if %> gave back $2 1/16 to $51 1/2 today after climbing 123% on its first day of trading on Friday.
Harnischfeger Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HPH)") else Response.Write("(NYSE: HPH)") end if %> dropped $13/16 to $29 15/16 after Furman Selz downgraded the manufacturer of papermaking and mining equipment to "sell" from "hold"... Appliance maker Whirlpool Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WHR)") else Response.Write("(NYSE: WHR)") end if %> was spun for a $1 5/16 loss to $73 7/16 after reporting lower year-over-year revenues for its Latin American operations, due mostly to weak market conditions in Brazil. For the quarter, EPS from continuing operations came in at $0.90, or $0.07 better than the First Call mean estimate... Torchmark Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TMK)") else Response.Write("(NYSE: TMK)") end if %> was flamed $1 1/2 to $48 1/4 after the insurer and asset manager reported Q1 operating income of $0.67 per share, a penny shy of the First Call mean estimate.
FOOL
ON THE HILL
An Investment Opinion
by
Jim Surowiecki
Caterpillar: Digging Up Value
For all the talk of the Information Age economy we supposedly live in, one of the most striking triumphs of the American economy over the last decade has actually been the resurrection of its industrial base. In the late 1970s and early 1980s American manufacturing was out on its feet, devastated by high interest rates, the strong dollar, bloated managerial hierarchies, weak R&D, and rising labor costs. Today, American manufacturing companies tend to be paragons of efficiency, with leaner organizations, more efficient factories, and much-improved management of supply and distribution. Further evidence for this arrived Friday, when heavy-equipment maker Caterpillar <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAT)") else Response.Write("(NYSE: CAT)") end if %> announced that its first-quarter earnings beat analysts' estimates handily, coming in at $1.15 a share when just $1.10 was expected.
Caterpillar's numbers represented a 9% percent growth in year-over-year earnings on a substantial 12% increase in overall revenues, and were decidedly impressive given the continued trouble in the Far East, where Caterpillar both does a lot of business and where its major competitors are located. There had been real concerns that the dramatic slump in demand for industrial machinery in Asia, a slump caused by the fact that Asian firms have had to cut back sharply on investment as interest rates have soared, would hit Cat especially hard. At the same time, Cat's future was also clouded by the prospect of Asian firms dumping expensive earthmovers on the U.S. market. But while the Asian crisis has certainly affected Caterpillar's bottom line, which is still expected to be flat this year compared to last, it has not eroded U.S. demand. If anything, U.S. demand has remained unusually strong, most notably for Caterpillar's engines.
Of course, Caterpillar is a classic cyclical stock, at least in the eyes of the stock market, in the sense that its performance is closely tied to the performance of the economy as a whole. In the context of the U.S., that means that it is reaping the benefits of low inflation, relatively low interest rates, a solid housing construction market, and a potentially booming market in highway construction, particularly in the wake of the $240 billion highway bill Congress is expected to pass. In the context of Asia, that means it is paying the price for the region-wide slump in new plant construction. When a recession hits, one of the first things to go is generally investment in new plant (though there's solid evidence that this is actually a strategic mistake). When companies are scrambling to pay their debts, they're generally not in the market for earthmovers.
As a result, Cat -- like the auto companies -- trades at a significant discount to the market as a whole, with a current P/E ratio of 13 at a time when the S&P 500 is valued at something like 27 times current earnings. That makes it a potential value when you look at how successfully it has weathered the Asian storm. Its gross and operating margins have remained consistent, while its net margin, though just 8.5-9%, has hardly wavered over the last year. In the most recent quarter, selling, general & administrative (SG&A) expenses did rise sharply, but that's due to a whole series of new product launches that in the next two years could strengthen the company's hold on both the compact construction-equipment market and the electric-power generation market. Cat is also investing heavily in research and development, a continued welcome trend from a company that nearly went out of business in the late 1980s. When Asia finally returns to a modicum of health, Caterpillar should be very well-positioned to take advantage of that market.
In no small part, Caterpillar has returned to financial health by taking a very hard line with its American workforce, breaking two different UAW strikes and amassing a formidable record of labor-law violations. This strategy, which depending on your perspective was either lamentable or necessary, has paid off on the bottom line. After years of regular losses, Cat has been profitable throughout the 1990s and will be so for the foreseeable future. At the same time, it has finally settled its differences with the UAW, agreeing to take back a number of workers who had been dismissed and finally signing a contract with assembly-line workers who had been working without one for almost three years. That, in turn, should help the company become more efficient and improve its productivity.
Caterpillar is, needless to say, no Dell <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> or Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %>. In other words, it's no one's idea of a growth stock. But its prospects for real and substantial revenue growth over the next decade are excellent, and as the latest earnings report demonstrates, its revenue streams are diversified enough to allow it to ride through substantial drops in regional demand while continuing to grow earnings year-over-year. Its short-term prospects are limited, but at a P/E of just 13, Caterpillar is worth more than a second glance for the long-term investor.
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
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