Boeing wows Wall Street
The aerospace manufacturer, which employs several hundred people in Utah, reported a 31 percent decline in third-quarter earnings Wednesday, largely because of the heavy costs of shutting down production of the 757 jetliner. But the latest surge of business for its growing defense operations ended a losing streak of two straight quarterly losses and helped it turn an unexpectedly solid $256 million profit, sending its stock up 7 percent.
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Profits from the defense unit, which includes the manufacture of military aircraft, weapons and launch systems, jumped an impressive 38 percent on a 12 percent gain in revenues.
That more than offset the latest decline in the commercial airplanes division, where earnings fell 90 percent because of pension contributions and a $184 million pretax charge to scrap the 757.
While its longtime mainstay unit continues to suffer from the post- 9/11 slump in aviation, Boeing is still riding relatively high because of the booming business in U.S. defense contracts.
Analyst Paul Nisbet of JSA Research said Boeing is reaping the same benefits as the other two biggest defense contractors — Lockheed Martin and Northrop Grumman, whose third-quarter sales rose 23 percent and 57 percent, respectively.
“We’re seeing not only the well-publicized increases in defense spending for regular Defense Department operations, but we’re seeing quite a bit of money coming in from supplemental budget amounts that are related to the war on terror, in Iraq and so forth,” Nisbet said. “And we’re seeing money coming in from Homeland Security.
“You put all that together . . . and it’s beginning to show up on the top line of these companies.”
Boeing’s net earnings for the July-through-September period amounted to 32 cents per share, down from $372 million, or 46 cents per share, a year earlier.
That was significantly higher than the 25-cents-per-share consensus estimate of analysts surveyed by Thomson First Call. As a result, Boeing shares closed $2.46 higher at $38.50 on the New York Stock Exchange.
Revenues dropped 4 percent to $12.24 billion from $12.69 billion - - the bulk of it from the defense and space unit, where revenue climbed to $7.3 billion.