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The Cleveland, Ohio-based company said second-quarter net income attributable to Eaton, which adjusts for non-controlling assets, plunged to $29 million or $0.17 per share from $333 million or $2.03 per share reported for the same quarter last year.

Net income in both periods included charges for integration of acquisitions. Excluding these acquisition integration charges, operating earnings in the second quarter of 2009 were $39 million or $0.23 per share, compared to $344 million or $2.10 per share in 2008. On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.17 per share. Analysts' estimates typically exclude special items.

The manufacturer of electrical control systems, hydraulics and truck transmissions, said its second-quarter net income plummeted to $31 million from $337 million in the previous year.

Net sales for the quarter were $2.901 billion, down 32% from $4.279 billion generated in the year ago quarter. Analysts had a consensus revenue estimate of $3.04 billion for the quarter.

Eaton said the 32% decline in quarterly sales included a 6% drop from exchange rates and a decline of 26% in core sales.

Segment-wise, Electrical Americas generated $881 million, significantly lower than $1.028 billion brought in by the segment for the same period last year. Electrical Rest of World's second-quarter revenues dropped to $595 million from $911 million reported last year, with European electrical markets declining steeply.

The Hydraulics segment reported $425 million in revenues, a sharp decline from $695 million reported in the previous year, as global hydraulics markets in the second quarter were very weak.

For the Aerospace segment, second-quarter revenues dipped to $409 million from $466 million reported last year, hurt by declines in the commercial aftermarket and inventory reductions at commercial Original Equipment Manufacturers.

Revenues of the Truck segment were $321 million, down from $625 million in the previous year, as weak freight volumes and limitations on financing negatively impacted truck production. The Automotive segment reported that quarterly revenues slumped to $270 million from $554 million in the previous year. In the second quarter, the automotive market in the U.S. was deeply impacted by the shutdowns at General Motors Corp. (GMGMQ) and Chrysler.

For the previous quarter, the company reported a net loss of $52 million, compared to prior year's profit of $250 million. Net loss attributable to Eaton shareholders was $50 million or $0.30 per share, compared to profit of $247 million or $1.64 per share in the same period in 2008. Net sales declined 20% to $2.81 billion.

For the first half of the year, the company reported a net loss attributable to Eaton of $21 million or $0.13 per share, in comparison with net income attributable to Eaton of $580 million or $3.69 per share in the previous year. Sales for the first six months dropped to $5.714 billion from $7.775 billion in the prior year period.

The company said it is maintaining its dividend for the second quarter at $0.50 per share, to be distributed in mid August.

Looking ahead, Alexander Cutler, Eaton's chairman and chief executive officer, said, ''As we survey our end markets, the year is shaping up to be considerably weaker than we had forecast in April. We now anticipate our overall end markets will decline by between 21 and 22 percent versus our earlier forecast of a decline between 15 and 16 percent. We see our U.S. markets declining by 25 percent, while our non-U.S. markets are expected to decline by 19 percent.''

Looking ahead to the third quarter, the company expects net income per share to be between $0.80 and $0.90. Operating earnings per share, which exclude charges to integrate recent acquisitions, are anticipated to be between $0.90 and $1.00. Analysts expect third-quarter earnings in the range of $0.47-$1.16 per share with a consensus of $0.89 per share.

Lowering its full year earnings guidance yet again, Eaton said it expects net income per share of $1.65-$1.85, and operating earnings per share of $2.00-$2.20 for 2009. Wall Street looks for full year earnings in the range of $0.92-$2.45, having a consensus of $1.90 per share.

In April, Eaton had slashed its full year operating earnings outlook to $2.50-$3.00 per share from $4.20-$5.20 per share.

The company today attributed the full year earnings revision to a change in its expectations for market growth, which the company hopes to be partially offset by an additional $120 million of savings from its cost-reduction initiative.

Among others in the industry, Johnson Controls Inc. (JCI) said Monday that third-quarter net income declined to $163 million or $0.26 per share from $439 million or $0.73 per share in the prior year period. Net sales for the quarter dropped to $7.0 billion from $9.9 billion in the year-ago period.

ETN closed Friday's regular trade at $44.95, down from the previous close of $45.44, on 2.53 million shares. In pre-market activity, the stock is trading at $47.36, up $2.41 or 5.36%.

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