The mining and equipment behemoth, Caterpillar Inc. CAT announced the formation of a new division, Analytics & Innovation (AI), in order to cash in on the growing importance of data analytics. The division will be led by Caterpillar Vice President Greg Folley.
The analytics and innovation unit will draw on workers from across the company and will also place some employees with Uptake. Last month, Caterpillar announced it has entered into a technology and predictive analytics agreement with Chicago, Illinois-based Uptake, a provider of dynamic analytics and insight platform for a wide array of industries. Caterpillar has made a minority investment in Uptake.
Caterpillar and Uptake will create a platform that will take in massive amounts of data, combine it with data science to recognize patterns and rapidly deploy information to save customers money, optimize performance while preventing unplanned downtime. The company is also placing resources in the Silicon Valley and has seeded money in a venture capital fund with the goal of investing in emerging technologies that could further enhance its product and service development.
Caterpillar is not the only industrial company with an eye on data and software services. Earlier this month, Komatsu Ltd. KMTUY and General Electric Company GE announced that they’ve entered into a partnership to provide big-data analysis services for mining projects to boost efficiency in areas ranging from excavation to transport and power generation.
At Caterpillar, now that Folley will lead the new AI unit, the company announced that Doug Hoerr will become the vice president assuming responsibility for the Components and Work Tools Division. Hoerr is currently the vice president of the Strategic Services Division.
Caterpillar’s earnings have been bearing the brunt of a muted mining environment and lower prices of oil and key mined commodities, particularly copper, coal and iron ore. For 2015, the company expects revenues to be around $50 billion and earnings per share of $4.75. Caterpillar reduced its guidance due to lower oil prices, weak mining, lowered expectations for Chinese construction equipment demand as well as a stronger dollar. Moreover, a declining backlog, weak agriculture sector, increased R&D expenses, continued sales decline and the recent SEC investigation remain headwinds for the company.
Caterpillar currently carries a Zacks Rank #4 (Sell). A better performing stock worth considering in the sector is Astec Industries, Inc. ASTE with a Zacks Rank #2 (Buy).
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