NEW YORK (TheStreet) -- Almost exactly one year ago, Caterpillar's chief executive, Jim Owens, in a statement that accompanied the heavy machinery bellwether's third-quarter earnings report, made a serious predictive gaffe.

Sure, he worried about the "substantial turmoil in financial markets" and the "acute weakness" that would likely develop in its North American, European and Japanese business segments. But, he went on to say, "Our current outlook for 2009 calls for sales and revenues to be flat" with the $50 billion the company took in during all of 2008.

Hindsight's perfect vision makes it difficult to criticize Caterpillar too much for the rank inaccuracy of that forecast. (It's worth pointing out here, however, that Caterpillar did presciently sound the economic warning bells in 2007, pre-crash -- making it among the first multinationals to do so.)

As it turns out, of course, the Peoria, Ill.-based company, which has laid off more than 30,000 workers since last year, is on track to bring in revenue of $33 billion in 2009, short of that $50 billion prediction by more than a third.

Couched as it was in so much concerned language, Owens' piece of augury last October didn't seem at the time like a slugger pointing his bat at the stands. But, again in retrospect, that's indeed what it has become -- only this time with the Mighty Casey doing the pointing, and then striking out.

Twelve months later, and also alongside the company's third-quarter earnings release, Caterpillar and Owens have made yet another bold call.

This time around, the prediction runs thusly: that full-year 2010 revenue will grow from 2009 by a rate of 10% to 25%.

Out in Peoria, optimism is, evidently, the new black. Gazing into the distant future, Caterpillar said in August that it could reach earnings per share as high as $10 a share in 2012, somewhat above the consensus target, which pegs EPS at a pedestrian-by-comparison $4.55.

It hasn't, of course, walked alone. Firms such as





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, United Airlines' parent


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and Brazilian mining giant


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have all used the podium of their third-quarter earnings reports to broadcast their feeling that demand has returned to their respective businesses.

Caterpillar came a little earlier than most. Its outlook gave a boost to its shares and, Dow-component bellwether that it is, the equities markets as a whole. Because it sells its conspicuous yellow earthmovers, backhoes, excavators and off-highway dump trucks to industries basic to the economy, Caterpillar's results are seen as a proverbial barometer.

And given the manifold uncertainties presented by a global economy struggling to emerge from the most severe recession in 80 years, the width of that 10%-25% range is, of course, intentionally huge -- "big enough to kick a field goal through," in the words of stock analyst Larry De Maria, of the brokerage firm Sterne Agee.

These days, the conventional wisdom has it that Caterpillar will easily score three points when it's all said and done in 2010.

But talk to professional Caterpillar observers and dealers long enough and you begin to wonder a little -- especially when it comes to the top of the range. The low end, by and large, has been deemed "possible" or "obtainable" or "likely." With Caterpillar shares trading recently at more than $57, investors have already baked revenue growth of about 11% into the stock price, De Maria says.

The high end of the range, on the other hand, has elicited skepticism of varying degrees. Words used to describe 25% growth expectations have included "optimistic," "aggressive," and even "laughable."

One of the bigger skeptics is Charles Yengst, of Yengst Associates, a consultancy and market research group specializing in the heavy-equipment industry. "I don't see where they think they're going to get all this revenue," he said. "I don't see any 25% possibilities. And I'm not even sure I see 10. I've been looking at all the markets they're in, and I'm not seeing it."

Almost everyone believes that the company's international business will contribute something to its projected 2010 growth, with China and the so-called emerging economies, especially Brazil, India and Southeast Asia, having experienced a much swifter recovery than their richer peers in North America and Europe. And given that Caterpillar now does some 63% of its sales overseas, and 23% in the Asia-Pacific region alone (up from 18% a year ago), it's believed that emerging-market growth can carry much of the weight as Caterpillar works to achieve its sales targets next year.

Still, with a potential price war looming in China with Komatsu, the huge Japanese truck maker, most people believe that at least some of the company's potential upside will have to come from improvement in North America. "We're hoping that we've seen the worst in terms of end-market demand," says De Maria. "We're probably at a bottom. But it's a matter of whether we'll just bounce along the bottom or not."

Another way for the company to boost sales, of course: continuing to speed the inventory burn. Caterpillar has, of late, severely curtailed production of new machines, content to let dealers move, sometimes below cost, the stuff they have sitting on their lots. Caterpillar is doing the same with its corporate fleet. Through the first three months of 2009, dealer inventories nationwide fell by $2.6 billion. There's much more to go, however: Caterpillar said it wants another $1 billion worth of dealer machines gone from the channel by the end of December.

At some point in 2010, the thinking goes, dealer inventories will reach such small numbers that even the anemic demand for Caterpillar equipment coming from customers these days will be enough to rouse dealers into placing orders with HQ for new machines, thus giving Peoria its much-wanted bump in revenue. Indeed, Caterpillar cited just this outcome for its bullish 2010 projection.

Then, of course, at some point in the slightly more distant future, when new construction projects eventually come on line, dealers will again want to replenish their inventories by ordering new machines.

To increase the plausibility of this chain of events occurring in real life, two obvious things would help: one, at least some recovery in the moribund construction business, whether residential or commercial; and, two, an uptick in work underwritten by stimulus-package infrastructure spending.

So far, these appear to be distant dreams. When it comes to infrastructure work provoked by this year's federal stimulus, disappointment has been the primary response, especially since lawmakers originally billed the legislation as a way to fix the nation's woefully decayed roads and bridges.

But, in the end, only about $100 billion of the $787 billion stimulus package was earmarked for infrastructure, and even that is a misleading number. Just $27.5 billion has made its way to the Federal Highway Administration, according to the American Society of Civil Engineers, and only another $4.6 billion to the Army Corps of Engineers for civil-works projects. The result: a rather trivial amount of infrastructure work in many parts of the country. Said one Florida-based Caterpillar salesman of the local stimulus-induced projects, "It did not cause a bounce in our business at all."

As for inventory levels, the week Caterpillar reported third-quarter earnings, Yengst was traveling through the middle of the country, paying visits to dealers of the hulking yellow machines. "I didn't see them interested in adding to inventories," he said recently. "And they won't be interested until they see customers coming through door. They're not going to do it on some kind of wish, that's for sure."

At Caterpillar dealers around the country, the mood remains bleak. A certain gallows humor has filled the void. When asked what his last sale had been, a salesman based in northeast Florida paused for a moment. "I can't remember."

In this particular market, where residential and commercial construction has all but ceased, prices for machinery have collapsed. Contractors have either gone out of business or vastly shrunk their fleets, flooding the used-equipment markets with stuff. One such customer recently traded in ten pieces to the Florida Caterpillar dealership where this salesman works in return for one piece -- a major trend all around the country. The dealer then went on to liquidate the equipment at auction.

"I've never seen anything like it before," the salesman said. "All in all, large iron has tanked."

It's just this sort of flooded market -- excess capacity, as the experts say -- that has people like Charles Yengst concerned. Even if construction projects get off the ground next year, and some demand returns for heavy machinery, so much used supply exists that buyers are more likely to shop around for used equipment than buy brand new models fresh from the factory.

Further, many customers will remain in such dire financial straits that they won't have the wherewithal to buy new, said Paul Campbell, executive vice president at Wheeler Machinery, a Caterpillar dealer in Salt Lake City. "We're looking for a lot of used to be sold next year."

At Holt Cat in San Antonio, Texas, the largest Caterpillar dealer in the U.S., "We're still way over where we want to be in terms of inventory," said Howard Hicks, Holt's vice president of marketing. With as much as $75 million worth of excess inventory on its lots, Hicks said it will likely take "close to another year" to work through that equipment and return to selling machines for "any kind of profit. Right now we're just breaking even on it. And some not even that."

There are some bright spots. The mining industry, unlike construction, appears to be on the verge of some capital spending. At Wheeler, in Utah, which derives 20% of its sales from mining equipment, several copper and gold producers have recently given the dealer requests for quotes. Actual new-machine purchases are expected soon.

"But when you look at housing and commercial construction, there's just nothing going on," said Wheeler's Campbell. He added that the company closely follows the flow of building permits in the regions where it does business (Utah and bits of Wyoming and Nevada). Based on this, he said, Wheeler expects construction activity in 2010 to worsen even from 2009 levels. "We don't see anything getting better until 2011," he said.

A little more than 1,300 miles to the east, on the shores of Peoria Lake in central Illinois, the future, however, looks brighter.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.