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Caterpillar Inc. Message Board

  • farid_rashad Feb 12, 2013 11:10 AM Flag

    Caterpillar's recent inventory troubles,

    and whether they are expected to continue. Anybody know recent info., thanks.

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    • All the available information was in the fourth quarter conference call transcript and the preceding press release. Everything written in the media has been based, factually or not, on those two company releases. You will not likely hear anything else officially from Cat about this issue. They'll be suing several parties for a partial return of their investment but the results will be buried in the annual report under pending litigation etc.

      Cat got snookered by the previous owners. My guess is that this acquisition may have been initiated by BUCY before Cat bought them and was followed through without starting all over. In the end it's a big goodwill write off and it affected Q4 bottom line results but it's not a cash flow item. They didn't get what they paid for but they still own the company. The head guy at BUCY is gone as a result and several Chinese managers involve with the fraud are gone but Cat will go on.

      The other inventory story is the huge reductions taken in Q4, about $2 Billion in Cat inventory and another $2 Billion in dealer inventory. That is an incredible reduction over a very short period of time. $4 billion worth of machinery or 6% of annual sales were sold to users without being replaced. That's huge.

      Sentiment: Hold

    • Just because you hear about inventory in china, and it having to be exported to lower it, doesn't mean that's the same situation in SA, especially for copper mines of Peru, and Brazil up coming sport events.

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