Thanks - and welcome to the thread. You're absolutely right. In my original post, although I did say R&D + Admin, I also froze the S+M for the earnings calcs, when I should have nudged it a bit for each number.
You have to admit they are in a great position here right now. They reserved their tax benefit during their losses (which INCREASED those losses in prior quarters), enough to cover around 30 cents or so of earnings (I'll have to check the actual number).
With the large backlog, the R&D having a large component of consulting and outside research costs, and also is partly customer funded (which can be easily managed up or down), and the tax benefit, they should have the ability to show a nice string of earnings increases, even with a lumpy military revenue stream early in 2003, and even if the Q1 or Q2 top line comes in slightly lower than Q4.
What they need is some regularly scheduled monthly production to smooth things out. The OEMS are starting to do that for them for the Communications segment. Between ABB and L-3, they likely achieve that goal within a couple of quarters.
So I view the problem (if you can call it a "problem") is to properly "street" manage the next 2-3 quarters, until the "lumps" can be smoothed out. |
