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MOLINE, Ill. (

TheStreet

) --

Deere & Co.

(DE) - Get Deere & Company Report

made good on what some had been predicting: a quarterly profit that handily exceeded Wall Street targets, combined with another round of ratcheted-down financial guidance.

Deere shares were under pressure in the early going Wednesday -- perhaps due to some profit-taking after a sharp run-up in the previous session, ahead of the earnings report, and perhaps because of Deere's reduced outlook. The company's stock was changing hands at $43.54, down $1.55, or 3.4%.

Before the opening bell Wednesday, the company said its profit in the just-ended fiscal third quarter received a boost from "strength in the U.S. market for large farm machinery," and, perhaps more importantly, "our efforts to keep a tight rein on costs and inventories."

This was especially the case in the company's reeling construction and forestry division, laid low by the bursting of the housing bubble, but where Deere is "successfully executing carefully designed plans to adjust expenses and asset levels in response to the severe decline in its markets," according to the company's press release.

Deere said third-quarter revenue dropped 24% to about $5.9 billion from a year ago. Net income, meanwhile, fell 27% to $420 million, or 99 cents a share. Analysts were expecting 57 cents a share on revenue of $5.25 billion.

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Looking ahead, Deere said it expects equipment sales to fall 34% in the fourth quarter and 21% in the full fiscal year compared with 2008. That annual sales decline is steeper than the company's earlier prediction of a 19% drop.

The company left its net-income prediction for 2009 at $1.1 billion, "despite the largest expected single-year sales decline in at least 50 years," Deere said, ballyhooing its ability to cut costs.

Still, because Deere has already posted $1.1 billion in profit through the first three periods of the year, it would seem that its bottom line for the fourth quarter will show no profit at all. Indeed, Deere said it's planning "significant production cutbacks" for the fourth quarter, a result of what it sees as very light retail demand.

Deere's quarterly report contained other brutal numbers, especially in the construction equipment division, which bled red ink, losing $28 million in the third quarter compared with a profit of $93 million in the year-ago period. The company said it expects sales in the division to end up down 47% for the fiscal year.

The company's agriculture and turf business will hold up much better than construction, Deere said. It expects fiscal-year sales to decline 15%, some 5% of which will result from unfavorable foreign-exchange rates from Deere's business overseas.

The agricultural business looks to be a mixed bag for the rest of the year, Deere said. Overall, farm machinery sales in the U.S. will likely decline "slightly" for the year, but the company said it's expecting to experience growth in sales of such things as large tractors, combines, sprayers and seeding equipment.

Breaking its forecasts down by geography, Deere said Western Europe will hold up the best, with sales declines for the year of 10% to 15%. In the U.S. and Canada, Deere said sales will come in 20% below the levels registered in 2008.

Moving beyond the dreariness implied by these numbers, Deere chief Samuel Allen made some high-minded remarks on why the company stands in good stead: "Deere is well-positioned to respond to the world's growing need for food, shelter, infrastructure and energy with a wide range of advanced equipment and services," Allen said in a statement.

-- Written by Scott Eden in New York

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