Lockheed Martin Corp. (LMT) 22 15/16: One month after defense contractor Raytheon warned about Q3 and full-year results, Lockheed Martin is warning about Year 2000 results. This morning the defense and aerospace contractor reported Q3 operating earnings of $0.48 per share, a penny above the First Call estimate on sales of $6.2 billion, 1.6% below year-ago level. The company also noted that sales for the first nine-months of 1999 were 3% lower than in the same period of 1998. And while Lockheed expects 1999 earnings to be at least $1.50 per share, in line with the First Call mean, the shocker is that Lockheed expects fiscal 2000 earnings to be approximately $1.00 per share, excluding nonrecurring and unusual items, a full $1.15 per share below the current First Call estimate. Now that's an earnings miss! Free cash flow is also expected to be lower than initially anticipated, down to around $500 million from prior estimate of $900 million. The company blames the performance in commercial space, delays in the System Integration business area, weakness in the commercial space business due to industry-wide concerns over recent launch vehicle failures and delays, and the inability to win contracts in such programs as Future Imagery Architecture, Astor and Wedgetail. On top of the bad news, Lockheed is announcing that its President and COO, Peter B. Teets, is retiring and resigning from the board of directors. Certainly today's announcement will put downward pressure on the stock, causing the stock to drop well under 20. However, the stock is already down about 36% since the Raytheon (RTN/B 27 5/8) warning last month and has lost more than half its value in the past year. Hence, this is already a broken stock and will not be bouncing back anytime soon. - RN
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