Caterpillar Crushes Expecations While Apple Gets Crushed After Hours

Good morning, good lookin'. Here are the three things you need to know on Jan. 28.

Jan 28, 2014 at 6:00AM

Monday wasn't just bad because we had to watch Justin Bieber's god-awful basketball skills. Despite Caterpillar's awesome earnings report, Wall Street suffered, too, as the Dow Jones Industrial Average (DJINDICES:^DJI) dropped 41 points ahead of the big Federal Reserve meeting (even though all you care about are Apple's (NASDAQ:AAPL) earnings). 

1. Apple profits flat vs. last year
What do 51 million iPhones give you? A lackluster quarter of sales. (Only in Cupertino.) The biggest company in the world, Apple, announced fourth-quarter earnings that made investors want to verbally abuse Siri: Revenues climbed 6% to $57 billion, and profits were flat at $13 billion. The shares went tumbling more than 7%.

The smartphone business is tough, with heavyweights Microsoft, Google, Samsung, and Apple all battling it out. Total iPhone sales climbed 7% from last year's fourth quarter, but 51 million is well short of analysts' 57 million expectations. iPhones are the most important thing for Apple. iPod sales were down 52%, as the primitive device continues its decent into obsolescence.

The takeaway is that Apple is a growth company no more. Profits in the fourth quarter (important because of the holiday season) were flat -- flat -- from last year. Investors worry if Apple is out of innovation, while CEO Tim Cook is so busy trying to get Apple's extra cash into the hands of demanding shareholders. Check out the best analysis of Apple's growth problem that Twitter has to offer

2. Caterpillar crushes Wall Street expectations
Caterpillar's (NYSE:CAT) fourth-quarter earnings report was shockingly optimistic. The builder of construction and mining vehicles reported $1 billion profits in the fourth quarter on $13.6 billion of revenues. 

Revenues dropped from last year, but effective cost-cutting managed to somehow boost profits substantially and smash Wall Street's estimates of $830 million in profits. CEO Doug Oberhelman sleeps with an ax in bed, in case an expendable worker tries to break in -- he pledged to keep costs down in 2014.

Positive vibes for emerging markets were coming from the report. The CEO said 2014 economic growth will be strong, countering recent market concerns that growth in China and elsewhere is slipping. In all, Caterpillar demolished the negative mojo the stock's seen the past year, and CAT stock rebounded by a big 6% Monday.
 
3. Cold weather freezes U.S. home sales
When the mercury drops, apparently so does business for real estate brokers. Sales of new homes surprisingly fell 7% in the last month of 2013, as the coldest December in four years kept people at home instead of looking for new places to live.
 
The takeaway is that investors aren't freaking out, because this one bad month won't ruin an awesome year. New home sales jumped more than 16% in 2013 to lead the housing market's best performance since 2008, as low interest rates created by the Federal Reserve's quantitative easing stimulus policy encourage folks to borrow money to buy new digs. Cold, schmold.
  
Tuesday:
  • The two-day Federal Reserve policy meeting begins
  • Fourth-quarter earnings: AT&T, Yahoo!, Ford
MarketSnacks Fact of the Day: Super Bowl ticket prices fell 40% this past week, to reach the lowest price for the championship game in more than a decade.

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Fool contributors Nick Martell and Jack Kramer have no position in any stocks mentioned. The Motley Fool recommends Apple, Ford, Google, and Yahoo! and owns shares of Apple, Ford, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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