22 Apr 09. Boeing, the US aircraft maker, suggested on Wednesday it would be prepared to cut production further should economic conditions worsen. It said quarterly profits had halved. The group has been hit by deferrals and cancellations as airlines globally struggle to cope with the downturn. Boeing received 32 order cancellations in the first quarter – more than the 28 new orders it booked. “The economic situation is uncertain,” said Jim McNerney, chief executive. “We can’t predict with absolute certainty that our current rate in the market will hold forever. Adjusting production rates is part of this business. We think we’ve got it right now, [but] we’ll have to keep reading and reacting.”
Net income in the first quarter fell to $610m, or 86 cents a share, from $1.21bn or $1.62 per share a year earlier. Boeing issued a profits warning this month and said at the time that the economic downturn had forced it to plan to cut production of its 777 – its most important long-haul jet – and would depress its previously forecast delivery prices, knocking 38 cents per share off its profits for the quarter. The group lowered its outlook on Wednesday for the full year to $4.70-$5 per share from the $5.05-$5.35 per share range it gave in January – maintaining a relatively bullish forecast, given analysts’ consensus forecast of about $4.60 per share. Boeing shares had risen 3.3 per cent to $37.86 by noon.
Pressed on whether the global downturn might prompt Boeing to cancel its 747-8 freighter programme, Mr McNerney said: “Could it get worse? Sure. If the economic environment continues to tank for another three or four years, the impact of deferrals and production rate changes could put additional economic pressure on it. Is it enough to kill the programme? I don’t think so.” Mr McNerney also said that Boeing’s defence arm – which accounts for about half of the company’s revenues – was looking to diversify internationally and into different areas such as homeland security services. Mr McNerney conceded that the changing priorities in US military spending recently announced by Robert Gates, US defence secretary, “put overall pressure on the budget” but that there was “a pretty rich backlog on the defence side internationally that we’re excited about”. He said the company was not sure what the requirements were for a new refuelling tanker for the US Air Force and that it was therefore difficult to know what aircraft model Boeing would offer in a competition. The group last year successfully protested against an award of the contract to provide 179 refuelling tankers to the air force to a team led by Northrop Grumman. The tender was subsequently cancelled. It is due to be re-launched this summer. (Source: FT.com)
20 Apr 09. IBM’s quarterly revenue fell by a bigger-than-expected 11
percent as the slowdown in corporate spending hurt even one of the healthiest U.S. technology companies. But higher margins helped International Business Machines Corp’s first-quarter profit beat Wall Street estimates, and the company affirmed its full-year earnings outlook — helping to limit the fall in IBM shares to 1.6 percent after
hours. “These were decent results in light of the challenging economy. Certainly the top line is being impacted by the weak economy,” said Andy Miedler, analyst at Edward Jones. “IBM is managing the business well, focusing on expense control, and its movement to software and services is clearly evident in the increasing profitability. Net-net we think this is a decent quarter.” IBM said on Monday first-quarter revenue fell to $21.71bn from $24.50bn a year earlier. That compared with analysts’ average forecast of $22.56bn, according to Reuters Estimates. Net profit for the quarter dropped 1 percent to $2.30bn, from $2.32bn in the year-ago quarter. Profit per share, however, rose to $1.70 from $1.64, as the number of shares outstanding decreased. Analysts on average were expecting $1.67 per share, according