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Technology Stocks : Boeing keeps setting new highs! When will it split? -- Ignore unavailable to you. Want to Upgrade?

To: Wally Mastroly who wrote (2069)	1/26/1999 3:01:00 PM
From: campe	Read Replies (1) \| Respond to of 3764

Finally, someone who understands the F in CFO... --------------------------------------------------------------- New Boeing CFO's Assignment: Signal a Turnaround Quickly By JEFF COLE Staff Reporter of THE WALL STREET JOURNAL SEATTLE -- For Deborah Hopkins, the new chief financial officer at faltering Boeing Co., a moment of truth came earlier this month when she stepped up to a blackboard during a company retreat in the California desert. With a half-apology, the former finance chief in Europe for General Motors Corp. chalked out what she thought was a rehash of simple formulas for measuring profitability -- principles like return on net assets and inventory turnover. To her astonishment, dozens of the 280 senior Boeing executives at the retreat came up to compliment her afterward, and some even said it was the first time they had understood the concepts. The lack of financial acumen, especially in the struggling commercial-airplane group, has been "a bit of a surprise," says the plainspoken Ms. Hopkins. Until recently, she says, some senior managers were apparently even selling airplanes "without understanding" the profit margins on each jetliner. It's been only six weeks since the 44-year-old Ms. Hopkins became the youngest senior executive hired by Seattle-based Boeing -- and the only woman to occupy such a senior post. But she has already impressed underlings and bosses alike with her knack for clarifying the towering challenges ahead. At a company long dominated by male engineers, bringing in an outsider was part of an attempt by Boeing's leaders to shake up the stodgy, familial management culture and instill a sense that financial performance is as important as building great airplanes. Landing Ms. Hopkins offers top management the chance to signal to an anxious board and angry stockholders that a turnaround is under way after two awful years of flagging share prices and factory foul-ups. In recent months, a string of senior executives have been forced out of the company. Smaller symbolic changes have been made, too: Just weeks before Ms. Hopkins started in mid-December, a wall of photographs of famous past Boeing executives -- a display jokingly referred to as the "wall of diversity" because all were white men -- was taken down from the main entrance and replaced with big pictures of male and female workers of different races on the job around the company. 'Good Communicator' Ms. Hopkins is "a good communicator and she knows what she's talking about," says Harry Stonecipher, Boeing's president and chief operating officer. "That's what people should be looking at when they look at the company," he adds. "Change is going on." Ms. Hopkins, found for Boeing with the help of an executive-search firm, promises she'll be "teaching the business" to Boeing's workers and managers. Another top priority is to look after the concerns of skeptical shareholders and analysts as never before. "That's what this is about," she says. "I need to deliver credibility, predictability and consistency." Ms. Hopkins's first such test will come Tuesday, when she joins Chairman and Chief Executive Phil Condit in reviewing fourth-quarter and year-end results for analysts. Some analysts and Boeing managers hope the duo will outline new progress on the elusive "better business plan" the company has been promising since last summer. Bringing in Ms. Hopkins is "a bold statement," says Byron Callan of Merrill Lynch. But he adds that projections of improvement will no longer suffice for Boeing on Wall Street. The company ended 1998 with record deliveries of more than 560 jetliners, and it expects to deliver 620 this year. But the maker of planes, rockets and satellites posted a $178 million loss in 1997, and it conceded in early December that the minimal profit margins it projects for 1999 will decline again in 2000 if it can't concoct a better plan. Part of the problem is the likelihood of reduced demand from Asia for Boeing's biggest jets, notably the 420-seat 747. Increasing demand isn't one of Ms. Hopkins's assignments, but she has a host of other problems to tackle at Boeing. Somewhere high on her list is raising Boeing's return on assets, which in turn could raise expectations for the stock price. While Ms. Hopkins won't detail her ideas, better control of inventory and more outsourcing of parts production are likely elements. The former has proved difficult for some of Boeing's finest manufacturing engineers. The latter is a touchy matter, with unions already riled by plans to cut more than 40,000 jobs during the next two years. Mr. Stonecipher's frustrated push to get cost data to line supervisors in a timely way has also ended up on Ms. Hopkins's to-do list. She wants to make Boeing more methodical about determining risk on its big projects. And she plans to unify a panoply of accounting systems left in the wake of Boeing's mergers with Rockwell International Corp.'s aerospace operations and McDonnell Douglas Corp. Ms. Hopkins has taken on big jobs before. At GM, she fixed supplier-fraud problems and introduced new risk-assessment methods, successes that boosted her from the general auditor's job she landed in 1995. Ms. Hopkins sees parallels between the ills that beset GM a decade ago and Boeing's problems today. Among them, she says, is that both were slow to change and presumptuous at times about their lack of vulnerability. 'Explain the Beans' When she talks of her most meaningful work experience, Ms. Hopkins refers back to her 13 years at Unisys Corp., where she rose from lowly financial planner to chief of the Worldwide Information Systems unit. During her time there, she helped orchestrate a difficult workout with banks in the early 1990s as the company struggled to survive. "We were selling paintings off the walls," she recalls. "She can add up beans, but she can also explain the beans," a Unisys spokesman says, confirming her role in the workout. At Unisys, Ms. Hopkins helped found an organization for executive women as well as a diversity council. Now, at Boeing, she says she wants to encourage the mentoring of women executives. Mr. Stonecipher seems particularly impressed with Ms. Hopkins's directness, a quality for which he himself has been both criticized and praised since he arrived at Boeing two years ago. In Ms. Hopkins's case, the characteristic borders at times on the audacious. For example, she makes no bones about her possible interest in one day running big operations such as the jetliner group -- and she says flatly she would like to run the company when Mr. Condit retires. As for Mr. Condit, who sorely needs results from Ms. Hopkins as soon as possible, "the name of the game is performance" when it comes to succession at Boeing, he says. "You don't get the job on your resume. You get it on what you produce."

To: Wally Mastroly who wrote (2069)	1/26/1999 3:03:00 PM
From: campe	Read Replies (1) \| Respond to of 3764

Here's another...I guess Q4 is only a data point and does not indicate a trend. ---------------------------------------------------------------- Dow Jones Newswires Boeing Beats 4Q Views, But For Reasons That Leave Doubts By NANCY FONTI Dow Jones Newswires NEW YORK -- Boeing Co. (BA) needs more than better-than-expected fourth-quarter earnings to prove to Wall Street that it has a healthy pulse, analysts said Tuesday. Before the market opened on Tuesday, the Seattle aircraft manufacturer reported profits of $465 million, or 48 cents a diluted share, about 14% better than the 42 cents analysts expected. The latest quarter included tax benefits of $30 million, or three cents a share, the company said in its news release. "The 48 cents doesn't reflect a more positive performance," said Lehman Brothers analyst Joseph Campbell. "It doesn't have anything to do with their ability to build planes profitably." A lower tax rate was the main reason earnings passed expectations, Campbell added. Boeing was taxed at about 16% in the latest quarter, down from the usual 30%, because of previous tax credits, he explained. NYSE-listed shares of Boeing recently traded at 35 5/16, down 1.9%, or 11/16, on volume of 3.2 million shares, compared with average daily volume of 5.2 million. In the year-ago quarter, the company reported a loss of 51 cents a share, which included an $876 million after-tax charge to phase out two McDonnell Douglas Corp. planes it inherited in its merger with that company. Excluding the charge and other items, a year ago the company earned 29 cents a share. Revenue came in at about $17.1 billion, a little better than expected and up from $11.7 billion a year ago. "Sales were slightly better than thought, and better for military than for commercial," Prudential analyst Nick Heymann said. Defense accounts for a little less than 40% of revenue, and the commercial side accounts for the rest. Also in the quarter, Boeing delivered 13 more commercial planes than it previously projected, bringing total deliveries to 191. Some of those planes are under short-term operating leases. But ING Baring Furman Selz Analyst Sam Pearlstein of attributed the better-than-expected earnings to the higher deliveries in addition to the lower tax rate. Boeing's challenge - reworking its production system and regaining financial control of itself - is a project that Heymann expects to take 16 to 20 more quarters to complete. The company is still recovering from production problems that ate away at earnings in 1997, the Asian financial crisis that hit later that year and extended into 1998 and the never-ending competition from European consortium Airbus Industrie. In the meantime, fourth-quarter earnings aren't terribly important to Wall Street, which is waiting to see how the company will handle the orders for 620 planes that it plans to deliver this year. "Nobody cares about earnings in the fourth quarter of 1998," said Bill Whitlow, a Seattle money manager for SafeCo Corp., which holds Boeing stock. "What the investment community cares about is peak earnings in 1999." Pearlstein, of ING Barings, added that in the latest quarter Boeing boosted its customer-financing reserves by about $50 million, which partially offset the tax benefits. In addition to announcing the fourth-quarter numbers, Boeing reiterated its expectations for 1999 and trimmed delivery and revenue projections for 2000. The company held onto its forecast of 620 commercial deliveries in 1999 - the peak of the latest cycle. Net income for 1999, Boeing said, should arrive at between $1.5 billion to $1.8 billion on revenue of around $58 billion. Commercial plane sales should be about $38 billion; military aircraft and missile systems should be $12 billion and space and communications will amount to $7 billion. The company expects a 1999 operating margin of between 4% and 5%. Boeing said in its news release that it plans to deliver 480 planes in 2000, down from a previous projection of 490. Also, the revenue projection for that year is now $49 billion, down $1 billion from earlier numbers, money manager Whitlow said. Pearlstein said the delivery revisions probably won't change earnings estimates, and Heymann said the changes aren't important in the long run. "Boeing must change how they design an aircraft with less time, labor and more outsourced components," he said. "Once corrected, they must rework the orientation of their customer base - today relationships are frayed with customers around the world." Boeing also said margins for 2000 should fall slightly from 1999 levels because of the mix of commercial aircraft deliveries. Most of the planes delivered in 2000 will come off of newer lines with lower profit margins than older, more established families. In its news release, the company said that the 737 next-generation program still has not turned a profit. In the first quarter of 1998, the company recognized a $350 million pre-tax loss related to the program, which in part fell victim to Boeing's congested production lines. Asia stung Boeing last year, too. In December, the company said weak demand from Asian airlines would force it to scale back jetliner production by 25% by the year 2000. Added to the bleak financial forecast was the announcement that the company would eliminate 20,000 jobs on top of previously. Changes at Boeing can't be expected overnight, Heymann said, but it has taken a large step toward cleaning up its financial picture by naming a former executive at General Motors Europe, Deborah Hopkins, financial chief. -Nancy Fonti 201-938-5451; nancy.fonti@cor.dowjones.com