FYI
BOEING CO. (BA) 50 3/8 +1 7/16. Aircraft maker is getting a boost today from its regular monthly
outlook that suggest that employment in its commercial airplane unit should see a reduction in
employment by the second half of 1998. While the stock has been battered in past sessions because
of production problems due to labor and parts shortages that led to the postponement of aircraft
deliveries and to a surprise 3Q loss in October, investors are now cheering that the company has
been able to get a handle on its troubled assembly operations which has enabled Boeing to deliver
24 of the 25 7-series jets it had projected for November, with the 25th plane delivered on December 1.
According to Boeing, it expects employment in its commercial airplane unit to decline by about
12,000 positions in the second half of 1998, with much of the job reduction coming from attrition. At
the same time, the company is not seeing any delays or cancellation in firm orders stemming from
the Asian crisis fallout. This new round of optimism about its production outlook has led CS First
Boston to raise its rating on the stock to a "buy" from a "hold" and up 1998 EPS estimates.
According to CS First Boston, it now expects Boeing to earn $2.75 in 1998, up from $2.65 a share,
versus projected earnings of $0.70 a share in 1997. The firm is also encouraged by the ability of
Boeing to raise airplane prices by 5% to 7%, which with the downward trend in employment, should
help boost the bottom line. The stock has been on a mini roller-coaster ride the last couple of months
as concerns over production have detracted from the momentum the stock had earlier in the year.
But, given the turnaround in assembly operations, upward momentum should again return to this
issue. |
