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Ahead Of The Bell: Eaton Sales Outlook

The Associated Press

HARTFORD, Conn. (AP) — Troubles in the auto industry could lead to reduced second-quarter revenue at manufacturer Eaton Corp., prompting at least one analyst to cut her profit estimates for the company.

Chief Executive Alexander M. Cutler told analysts at a conference Tuesday that the manufacturer of products ranging from car and truck transmissions to electrical circuit breakers could be $100 million less than the low end of Eaton's estimated revenue range of $3 billion to $3.1 billion for the second quarter.

He cited shutdowns of Chrysler and General Motors Co. plants "and the fact that we think Europe has not yet found a bottom."

"It's still mid-quarter, it's very hard to call these things, but that's our most up-to-date feel on likely revenues at this point," Cutler said.

Yvonne Varano, an analyst at Jefferies & Co., said in a note to investors that the possible $100 million drop in revenue is "more extensive than anticipated."

As a result, she said she is taking "a more conservative view" toward second-quarter revenue for the Cleveland company. Varano cut her second quarter profit estimate to 12 cents per share from 24 cents per share.

For 2009, she estimates $1.68 per share, down from $1.90 per share.

Analysts surveyed by Thomson Reuters expect earnings in the second quarter to be 26 cents per share and estimate profit to be $2.07 per share for the full year.

Nigel Coe of Deutsche Bank North America said Cutler's warning on revenue "is a concern and makes it hard to have confidence in the near-term picture." He maintained his profit estimate of $2 per share for 2009.