The Zacks Analyst Blog Highlights: Caterpillar, Interpublic Group of Companies, General Motors, Intel and Google

Zacks

For Immediate Release

Chicago, IL – November 21, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Caterpillar Inc. (CAT-Free Report), Interpublic Group of Companies, Inc. (IPG-Free Report), General Motors (GM-Free Report), Intel Corporation (INTC-Free Report) and Google Inc. (GOOG-Free Report).
 
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Here are highlights from Wednesday’s Analyst Blog:

Caterpillar to Close Another Mine
 
Caterpillar Inc.’s (CAT-Free Report) earnings performance over the past few quarters is nothing to cheer about. Lackluster third quarter results, a trimmed outlook for 2013, declining backlog and the negative impact of the European debt crisis are some of the recent challenges and the company is struggling to find ways out of the maze.
 
In such a scenario, Caterpillar is looking to curtail costs and get rid of some hindrances. In line with that, the company has planned to close its Pulaski, Va., facility and lay off 240 workers.
 
Caterpillar shares gained 0.4% following the announcement of the news as the market reacted favourably to the latest in a series of cost cutting measures announced by this construction and mining behemoth to combat the weak demand for its products.
 
The production of underground mining equipment, which includes scoops, coal haulers and other equipment, will be transferred to a Caterpillar plant in Houston, Pa., by mid 2014. Earlier this month, Caterpillar had announced the closure of its plant in Beckley, W.Va. The Beckley facility specializes in the production of highwall miners used in underground mines.  
 
In October, Caterpillar had announced the closure of its Kilgore, Texas, manufacturing operations by the end of the year. The Kilgore facility makes dippers and ballast boxes used in mining shovels. The company is also closing facilities near Toronto and Sudbury, Canada; Summerville, S.C.; and Owatonna, Minn.
 
Caterpillar continues to focus on cost-cutting initiatives given the challenging end markets. In 2013 so far, Caterpillar has effectively lowered costs by about $700 million and reduced capital expenditures by approximately $400 million.
 
Lower mining demand has been a deterring factor for Caterpillar’s earnings so far this year. Earnings slumped 43% year over year to $1.45 per share in the wake of an 18% decline in revenues to $13.4 billion in the third quarter. Even though Caterpillar forecast sales in the fourth quarter to be slightly higher than in the third quarter, it cautioned that earnings per share will be lower due to higher costs resulting from seasonal spending patterns.
 
For fiscal 2013, Caterpillar now projects sales of $55 billion, down from the previous range of $56 billion to $58 billion. Caterpillar now expects to earn $5.50 per share in 2013, down from the earlier projection of earnings of $6.50 per share due to lower sales volume including an unfavorable mix of products and lower price realization. This is the third quarter in a row in which Caterpillar has trimmed its fiscal 2013 guidance.
 
We believe the key to remain afloat in turbulent times is to identify and reduce discretionary expenses, trim capital spending, defer new capital development programs, divest underperforming assets and consolidate operations wherever possible. Caterpillar is taking the right measures by resorting to temporary layoffs, shutting down or shifting operations.
 
Caterpillar currently retains a Zacks Rank #5 (Strong Sell).
 
IPG Acquires Brazilian Firm

Advertising major, Interpublic Group of Companies, Inc. (IPG-Free Report) recently announced that one of its operating units - MRM - has acquired the Brazilian digital and CRM services agency, E/OU. Post-acquisition the integrated unit will be named E/OU MRM and will be managed by the existing employees.

Set up in 2003, E/OU offers multiple services including digital, direct, relationship and CRM services. Some of its major clients include General Motors (GM-Free Report), Santander, Qualicorp, BASF, Michelin, Universidade Metodista and AC Camargo. The company is considered as one of the fastest growing agencies in its field and has won multiple awards.

The acquisition by MRM, a top global digital agency, is expected to boost its global presence. MRM currently has 31 offices in 22 countries, with some big corporate names on its client list, including General Motors, Nestle, Intel Corporation (INTC-Free Report), Google Inc. (GOOG-Free Report), Zurich Financial Services, The Coca-Cola Company, Verizon, MasterCard and Johnson & Johnson.

MRM believes that the newly acquired company complements its service offerings. The company expects E/OU’s unmatched solutions will enable it to offer an enhanced digital brand experience to its clients in Brazil and Latin America.  

MRM is a part of Interpublic’s subsidiary McCann Worldgroup. McCann Worldgroup is a leading global marketing company that caters to advertising, digital marketing/relationship management, event marketing/promotion, consulting/design and public relations, among others.

This acquisition can be considered an effective strategic move by McCann Worldgroup to strengthen its leadership position in Brazil. Earlier this year, the company had acquired Preview, an agency specializing in health and wellness communications.

Interpublic currently carries a Zacks Rank #3 (Hold).

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