Deere & Co reported a drop in quarterly earnings that was not as steep as Wall Street expected and gave a less dire outlook than analysts had feared, saying it was well-positioned to weather a worsening slump in demand for its farm equipment. "Folks were gearing themselves for a meaningfully worse outlook," said Robert Baird & Co analyst Mircea Dobre. The company said it expected sales to drop about 11 percent in its first quarter, which began on Nov. 1, and fall about 7 percent for the year. Deere forecast net income attributable to the company at about $1.4 billion, down from $1.94 billion reported for fiscal 2015. Analysts on average were expecting about $1.31 billion, according to Thomson Reuters I/B/E/S. While Deere has managed to beat analysts' expectations, market fundamentals largely remain weak. The company holds a share of about 60 percent of the U.S. farm equipment market and relies on the United States and Canada for the bulk of its sales and revenue. But industry sales of U.S. and Canadian high-powered two-wheeled drive tractors fell 34 percent in October, according to the Association of Equipment Manufactures. The U.S. Department of Agriculture said it expected U.S. net farm income to decline to $55.9 billion in 2015 from $90.4 billion in 2014 after reaching historical highs in 2013. In Europe, the agriculture market is under pressure due to lower farm income. And in South America, Brazil has gone further into a recession after four straight quarters of contracted economic activity. Deere also faces a glut of used equipment, which could force it to slow production or cut jobs, said Argus Research analyst Bill Selesky. Still, the company said it would consider a stock buyback and raising its dividend. In the fourth quarter ended on Oct. 31, net income attributable to Deere fell to $351.2 million, or $1.08 per share, from $649.2 million, or $1.83 per share, a year earlier. Analysts on average had expected a profit of 75 cents per share, according to Thomson Reuters I/B/E/S. Earnings from equipment operations dropped to $335 million from $910 million. The company forecast an increase in capital expenditures to about $800 million for fiscal 2016 from about $688 million for the prior year.