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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1582)	4/20/1999 8:05:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

FOCUS - Boeing beats estimates, productivity up By Martin Wolk SEATTLE, April 15 (Reuters) - Boeing Co. reported first-quarter profits well above Wall Street estimates Thursday, bolstered by improved performance from its troubled commercial airplane division. The Seattle-based aerospace giant said it earned $469 million, or 50 cents a share in the quarter, compared with just $50 million, or 5 cents a share, a year earlier when it was battered by severe production problems. Wall Street analysts, on average, had expected Boeing to post income of 43 cents a share, according to First Call. Revenues for the quarter rose to $14.4 billion from $12.9 billion a year earlier as Boeing neared the peak of its production cycle, delivering 148 commercial jets vs. 108. "Increased operating margins in each of our three operating units enabled us to have a solid first quarter," Boeing Chairman and chief executive officer Phil Condit said. "The production health measurements in all of our commercial airplane programs improved significantly as the recovery plan continued to yield the intended results." Boeing stock surged $4 in heavy trading on the New York Stock Exchange to a four-month high of $42, bringing its two-day gain to 21 percent. The stock surge was credited in part to a market rotation favoring cyclical industries, but left some analysts baffled. "The quarter is irrelevant," said Peter Aseritis of CS First Boston, who recommended that investors take profits. "Boeing is still telling you that commercial airplanes (sales) are going to fall $9 billion next year. The cyclical downturn is still coming." Indeed, Boeing left unchanged its projection that overall revenues will drop to $49 billion next year from an expected $58 billion this year. The company expects overall operating margins of 4 percent to 5 percent in both years. More bullish analysts focused on Boeing's ability to beat the consensus estimate after nearly two years of continuously reduced expectations. "There were some nice surprises on the upside that indicate that Boeing is getting a handle on the problems and we're starting to see a return to profitability in a material way," said Peter Jacobs of Ragen MacKenzie. "The markets are starting to feel a little bit better about the Boeing story." But clearly Boeing has missed the chance to profit from the current cycle, with commercial airplane deliveries expected to peak this year at 620 airplanes, up from 559 last year. Boeing projects deliveries will fall to 480 next year and many analysts expect the number to continue falling for several years. Boeing is eliminating up to 53,000 jobs from its peak of 238,000 last year and is looking to sell or close unprofitable divisions. "This demonstrates they have certainly solved their production problems," said Bill Whitlow, a Safeco mutual fund manager who sold the last of his 75,000 Boeing shares early this year. "From a shareholder point of view I'm more concerned about how far down does this next cycle go, and that overshadows the improvement in productivity." Boeing said its commercial airplane margins were boosted partly by reduced spending on research and development this year and that it expected to maintain the improved margin level through 2000. Boeing's military aircraft and missiles segment had operating revenue of $3 billion for the 1999 first quarter, flat with the year-earlier period. Its space and communications segment showed operating revenue of $1.5 billion, $300 million lower than the year-earlier quarter due partly to fewer launches for its Delta II rocket. ((-- Seattle bureau 206-386-4848, marty.wolk@reuters.com)) TABLE-Boeing Co. Q1 shr $0.50 vs $0.05 BOEING FIRST CALL Q1 ESTIMATE $0.43 SEATTLE, April 15 (Reuters) - FINANCIAL HIGHLIGHT (In Millions except per share) Three months ended March 31 1999 1998 Sales and other operating revenues $14,392 $12,945 Net earnings 469 50 Earnings per share * .50 .05 Average shares (millions) * 945.2 985.1 * Diluted The Boeing Company and Subsidiaries Consolidated Statements of Operations (Unaudited) (Dollars in millions except per share data) Three months ended March 31 1999 1998 Sales and other operating revenues $14,392 $12,945 Cost of products and services 12,763 11,777 Gross profit 1,629 1,168 Equity in income (loss) from joint ventures 8 (47) General and administrative expense 491 493 Research and development expense 361 487 Share-based plans expense 46 22 Operating earnings 739 119 Other income, principally interest 40 67 Interest and debt expense 109 113 Earnings before income taxes 670 73 Income taxes 201 23 Net earnings 469 50 Basic earnings per share .50 .05 Diluted earnings per share .50 .05 Cash dividends per share .14 .14 Excluding the share-based plans: Net earnings 498 64 Diluted earnings per share .53 .06 NOTE: The 1998 first quarter results were reduced by a $219 million (after-tax) forward loss on the Next-Generation 737 program. ((New York Newsroom 212-859-1700))