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Cummins shares tumble on weaker revenue outlook

NEW YORK (AP) -- Shares of Cummins Inc. tumbled Tuesday after the diesel engine and generator maker raised its dividend, but cut its revenue forecast for the year.

THE SPARK: Cummins said its board raised the company's quarterly cash dividend by 10 cents, or 25 percent, to 50 cents. At the same time, Columbus, Ind.-based Cummins said it now expects its 2012 revenue to be in line with 2011 levels, instead of up by its previously predicted 10 percent.

The company's 2011 revenue totaled $18.05 billion. Analysts, on average, expect $19.82 billion in 2012 revenue, according to FactSet. The company also said that it expects its second-quarter revenue to total about $4.45 billion, while analysts polled by FactSet had expected $5.07 billion in revenue.

THE BIG PICTURE: Cummins said the new dividend will be paid Sept. 1 to shareholders of record as of Aug. 22. The company said the increase reflects its confidence in its long-term prospects, strong cash flow and low debt.

Cummins attributed the reduced revenue guidance to lower demand from certain markets stemming from slowing global economic growth. It noted that order trends in the U.S. for trucks and power generation equipment have softened and demand in Brazil, China and India is not improving as previously expected.

THE SHARES: Down $9.11, or 9.6 percent, to $86.33 in afternoon trading, after slipping as low as $86.24 earlier in the day. Over the past 52 weeks, the company stock has traded between $79.53 and $129.51.

The stock has dropped about 25 percent since mid-March.