April 27, 2011 / 11:21 AM / 6 years ago

UPDATE 4-Rockwell Automation outlook disappoints Street

* Q2 EPS $1.14 vs Street view $1.12

* Sees 2011 EPS $4.40 to $4.60 vs. $4.54 expected

* Warns of Q4, 2012 supply chain risk from Japan crisis

* Shares down 11 pct (Rewrites first paragraph, adds CEO and analyst comments, updates stock price)

NEW YORK, April 27 (Reuters) - Rockwell Automation Inc's (ROK.N) outlook disappointed Wall Street amid supply chain concerns after the earthquake and tsunami in Japan, sending the company's shares down 11 percent.

The maker of factory efficiency systems raised the bottom of its 2011 profit estimate but kept the top of the range unchanged for the first time in six quarters.

The earthquake in Japan could affect Rockwell's supply chain and the cost of commodities including copper, steel and rare earth materials are rising faster than expected, the company said. That is prompting central banks to raise rates to quell inflation, raising questions about future economic growth.

"The reason we did not raise (guidance) is some of these uncertainties," Chief Executive Keith Nosbusch said in an interview.

"There's no question we're in a strong industrial environment but we're in a very difficult macroeconomic environment. We're just not sure which way that is going to play out, and thought staying where we were was the best balance."

Rockwell said it was concerned about its second- and third-tier Japanese suppliers' ability to ramp up production of materials like resins and films that go into the electronics Rockwell sells to customers.

Some goods are concentrated in Japan and are produced in places affected by the nuclear crisis that followed last month's quake and tsunami. The company has adequate inventory for the third quarter, but supply chain shortfalls could become a factor in the following quatrer and its 2012 fiscal year.

EARNINGS BEAT

Rockwell's forecast overshadowed a better-than-expected quarterly profit report.

Rockwell shares were down 11 percent at $87.06 on Wednesday morning, erasing about $1.5 billion from its market capitalization. They had risen 36 percent this year, outperforming both industrial peers and the broader market.

"Valuation was getting stretched," Nomura analyst Shannon O'Callaghan said. "(Rockwell) needed a strong beat and raise this quarter more than any other company in our sector."

Net earnings rose to $166.4 million, or $1.14 per share, in the fiscal second quarter ended March 31, from $137 million, or 95 cents per share, a year earlier.

Analysts on average expected $1.12 per share, according to Thomson Reuters I/B/E/S.

Sales rose 26 percent to $1.46 billion, above a Wall Street forecast of $1.41 billion.

Milwaukee-based Rockwell has benefited as manufacturers, who slashed capital spending budgets during the recession, have resumed investing in systems that reduce operating costs.

Rockwell, whose rivals include Emerson Electric Co (EMR.N), Germany's Siemens AG (SIEGn.DE) and Japan's Mitsubishi Electric Corp (6503.T), raised the bottom of its 2011 earnings forecast by 10 cents to $4.40 a share. The top of the range remains $4.60.

At its midpoint, the forecast is below analysts' average estimate of $4.54. (Reporting by Nick Zieminski; Editing by John Wallace, Matthew Lewis, Dave Zimmerman)

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