Chicago Bridge & Iron (CBI) Mixed Report

Chicago Bridge & Iron (CBI), another in our infrastructure basket, had a mixed earnings report today. They beat revenue quite soundly but missed earnings estimates. However, some nice guidance for 2008. The stock has been acting a bit poorly on fears of exposure to a certain debt laden, currency devalued, crony government, financial innovating country, but only about 1/3rd of business is from that backwater. Plus from all I am told that country will be BOOMING in 6 months ("Fed Cuts Solve Everything") so I don't understand the concern. Ironically, this quarter was hurt by underperformance in the European, African, and Middle Eastern division, not the US. But again, these infrastructure companies have very lumpy quarters so it is hard to judge them on Wall Street's obsession of 90 day time frames.

• Engineering and construction services company Chicago Bridge & Iron Co. NV said Wednesday its fourth-quarter profit rose 15 percent on new contract awards and earnings from a recently acquired business, but the profit missed Wall Street's expectations.
• The company earned $44.2 million, or 46 cents per share, compared with $38.6 million, or 40 cents per share, in the year-ago quarter.
• Revenue surged 51 percent to $1.32 billion, from $873.5 million in the prior-year period.
• Analysts were expecting a profit of 51 cents per share on revenue of $1.19 billion, according to a poll by Thomson Financial.
• CB&I said the quarter was boosted by the integration of oil and gas production unit Lummus Global, which it bought from Swiss power transmission and automation company ABB Ltd. in November. However, CB&I said the quarter was hurt by an underperforming project in its Europe, Africa and Middle East region.
• New contract awards for 2007 totaled $6.2 billion, an increase of 40 percent over 2006.

Guidance

• Engineering and construction services company Chicago Bridge & Iron Co. NV on Wednesday issued a 2008 earnings prediction above Wall Street's expectations.
• The company expects earnings of $2.40 to $2.65 per share, on revenue of $5.9 billion to $6.2 billion. Analysts expect CB&I to report a profit of $2.39 per share on sales of $5.97 billion.
• The company predicts new contracts will total $6.5 billion to $7 billion, compared with $6.2 billion in 2007.

Now compare results from this sort of company or others I hold with very large global exposure to URS (URS) which is another infrastructure stock but dependent on that before mentioned debt laden, currency devalued, crony government country (which will be booming in 6 months). Even in infrastructure it pays to avoid the US of A. How sad; especially in a country with massively sagging infrastructure. Your tax dollars are too hard at work going to special interests, fighting wars or paying for national debt interest to take care of roads, bridges, and minor things like that. Keep in mind as LOCAL governments (who cannot print money magically) and must balance their budgets get hit by a drop in revenue from tax assessments cut backs will be coming in a large way in 2008-2009. Thankfully our federal government doesn't need to bother with such constraints - so we can spend into a black hole.

URS Sees Difficult 2008

• URS Corp., an engineering and construction company, on Tuesday offered fiscal 2008 guidance below analyst expectations amid a difficult public infrastructure spending market.
• The company predicted earnings between $2.24 and $2.36 per share, or $2.61 and $2.73 per share excluding costs related to URS' November acquisition of Washington Group International Inc. Analysts polled by Thomson Financial expect earnings of $2.89 per share, on average.
• "We expect a near-term slowdown in public infrastructure spending as a result of the current economic downturn and the increasing budget challenges facing state and local governments," said Martin M. Koffel, company chairman and chief executive, in a statement. "It is prudent to assume that, as a leading infrastructure firm, our 2008 results will be tempered by the weakness in this market."

Long Chicago Bridge & Iron in fund; no personal position