IBJNews

Cummins shares slide on job cuts, lower forecast

Back to TopCommentsE-mailPrintBookmark and Share

Shares in Cummins Inc. fell to the lowest level in three months Wednesday after the Columbus-based engine maker lowered its forecasts for revenue and profit and said it expects to cut as many as 1,500 jobs by the end of the year.

Its stock was trading at about $88 at noon, down almost 3 percent from Tuesday's $90.84 close. Earlier, they dropped to $86.50, the biggest intraday decline since July 10. The shares had gained 3.2 percent this year through Tuesday.

Cummins on Tuesday cut its forecast for full-year revenue to about $17 billion from $18 billion and reduced expectations for earnings before interest and taxes to about 13.5 percent from a range of 14.25 percent to 14.75 percent. That doesn’t include the cost or benefits of the job cuts.

“In my view this is worse than feared,” said Kristine Kubacki, a St. Louis-based analyst at Avondale Partners LLC. “My sense is the Street thought there would be a guide down, but this is sizable.”

Cummins, which has about 8,000 employees in Indiana, produces engines for trucks and power-generation equipment. The company had second-quarter earnings of $2.45 a share, excluding gains from divestitures. That exceeded the average of 18 estimates compiled by Bloomberg of $2.27.

“We continued to see weak economic data in a number of regions during the third quarter, increasing the level of uncertainty regarding the direction of the global economy,” Chief Executive Officer Tom Linebarger said in a statement. “As a result of the heightened uncertainty, end customers are delaying capital expenditures in a number of markets, lowering demand for our products.”

Class 8 truck orders fell 35 percent in North America last month to 15,205, according to FTR Associates.

ADVERTISEMENT

  • Touche
    But its kind of hard for the working poor and most middle class families to do that these days. Some of us have health problems, had to pay for college ourselves and pay a tax rate higher than 14%.
  • @HOOSIERLIB
    Maybe this be a good "teaching moment" for Democrats. Always prepare for the worst. Keep at least 6 months of income in a liquid savings account, save save save, because it's your own responsibility to prepare for the worst and hope for the best.
    • Safety Net
      Hopefully, this doesn't ruin anyone's life or hurt's their family. That being said, this will provide a good "teaching moment" for Republicans, perhaps they will understand the need for a good social safety net and that executives care more about their bonuses, than they do about the lives employees. Unfortunately, their nominees for governor and President reflect the latter philosophy. People before profits!

      Post a comment to this story

      COMMENTS POLICY
      We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
       
      You are legally responsible for what you post and your anonymity is not guaranteed.
       
      Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
       
      No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
       
      We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
       

      Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

      Sponsored by
      ADVERTISEMENT

      facebook - twitter on Facebook & Twitter

      Follow on TwitterFollow IBJ on Facebook:
      Follow on TwitterFollow IBJ's Tweets on these topics:
       
      Subscribe to IBJ
      1. By Mr. Lee's own admission, he basically ran pro-bono ads on the billboard. Paying advertisers didn't want ads on a controversial, ugly billboard that turned off customers. At least one of Mr. Lee's free advertisers dropped out early because they found that Mr. Lee's advertising was having negative impact. So Mr. Lee is disingenous to say the city now owes him for lost revenue. Mr. Lee quickly realized his monstrosity had a dim future and is trying to get the city to bail him out. And that's why the billboard came down so quickly.

      2. Merchants Square is back. The small strip center to the south of 116th is 100% leased, McAlister’s is doing well in the outlot building. The former O’Charleys is leased but is going through permitting with the State and the town of Carmel. Mac Grill is closing all of their Indy locations (not just Merchants) and this will allow for a new restaurant concept to backfill both of their locations. As for the north side of 116th a new dinner movie theater and brewery is under construction to fill most of the vacancy left by Hobby Lobby and Old Navy.

      3. Yes it does have an ethics commission which enforce the law which prohibits 12 specific items. google it

      4. Thanks for reading and replying. If you want to see the differentiation for research, speaking and consulting, check out the spreadsheet I linked to at the bottom of the post; it is broken out exactly that way. I can only include so much detail in a blog post before it becomes something other than a blog post.

      5. 1. There is no allegation of corruption, Marty, to imply otherwise if false. 2. Is the "State Rule" a law? I suspect not. 3. Is Mr. Woodruff obligated via an employment agreement (contractual obligation) to not work with the engineering firm? 4. In many states a right to earn a living will trump non-competes and other contractual obligations, does Mr. Woodruff's personal right to earn a living trump any contractual obligations that might or might not be out there. 5. Lawyers in state government routinely go work for law firms they were formally working with in their regulatory actions. You can see a steady stream to firms like B&D from state government. It would be interesting for IBJ to do a review of current lawyers and find out how their past decisions affected the law firms clients. Since there is a buffer between regulated company and the regulator working for a law firm technically is not in violation of ethics but you have to wonder if decisions were made in favor of certain firms and quid pro quo jobs resulted. Start with the DOI in this review. Very interesting.

      ADVERTISEMENT