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FURTHER EVIDENCE OF STRENGTH OF U.S. DEFENSE SECTOR

01 Feb 07. Raytheon Co. on Thursday said fourth quarter earnings rose 32 percent, driven by growing defense contract bookings and strong sales of missiles and battle operations communications systems.

The world’s fifth-largest defense contractor also slightly raised its financial forecast for the current year. Waltham-based Raytheon said net income for the October-December period rose to $365m, or 81 cents per share, up from $276m, or 61 cents per share, in the year-ago period. The figures were boosted by a $73m profit in the latest quarter compared with $45m a year ago at Wichita, Kan.-based Raytheon
Aircraft — a unit that Raytheon is selling to focus on its core government and defense business, despite the division’s recently improving performance.

Raytheon announced a $3.3bn deal in December to sell the unit to Hawker Beechcraft Corp., a new company formed by an affiliate of Goldman Sachs and Onex Partners. The unit makes Hawker and Beechcraft planes for commercial and military markets. Raytheon reported the aircraft unit as a discontinued operation in its financial results for the latest quarter and the comparable quarter a year ago.

Excluding the aircraft operations, Raytheon’s net sales last quarter were $5.7bn, up 12 percent from $5.1bn in the same period a year earlier.

Raytheon’s quarterly profit from continuing operations — a measure that excludes the aircraft operations — was $292m, or 65 cents per share, up from $231m, or 51 cents per share, a year ago. Those figures also exclude other various one-time charges for both quarters, besides the aircraft operations. On that basis, the profit for the latest quarter matched the 65-cents-per share consensus forecast of analysts surveyed by Thomson Financial.

Raytheon’s full-year profit was $1.283bn, or $2.85 per share, up from $871m, or $1.92 per share, in 2005. The 80,000-employee company said it added $7.8bn in government and defense contract bookings in the fourth quarter compared with $5.5bn in the year-ago quarter. During the quarter, Raytheon booked $558m in additional work for the Navy’s DDG 1000 Destroyer Program. Fourth-quarter sales at Raytheon’s Missile Systems division rose 17 percent to $1.32bn, while sales at the Integrated Defense Systems unit rose 14 percent to $1.189bn. That Tewksbury, Mass.-based unit develops surveillance and communications technology to coordinate battle operations.

Raytheon on Thursday also increased its financial expectations for this year, citing strong sales and a reduction in pension expenses. The company now projects a 2007 profit in the range of $2.85 to $3 per share, up from its earlier per-share forecast of $2.75 to $2.90. Sales are projected to reach $21.4bn to $21.9bn, compared with the company’s earlier forecast of $21.3bn to $21.8bn. Analysts forecast $21.76bn in revenue and a profit of $2.94 per share.

On January 31st, The Boeing Company [NYSE: BA] fourth quarter net earnings more than doubled to $989m, or $1.29 per share, from $460m, or $0.58 per share, a year ago (Table 1). Adjusted earnings per share*, removing effects of tax benefits and discontinued businesses, rose 57 percent to $1.16 per share.
Boeing boosted its 2007 earnings per share guidance to between $4.55 and $4.75, and set its 2008 guidance at between $5.55 and $5.75, reflecting expected strong revenue growth and expanding margins across its businesses. The company’s 2007 R&D forecast is unchanged and R&D spending is expected to decline in 2008.

“2006 was a very good year for Boeing. We achieved new records in revenue, cash flow and backlog, and overcame some meaningful challenges by focusing on improving productivity and meeting our commitments,” said Boeing Chairman, President and Chief Executive Jim McNerney. “This focus on performance gives us the confidence to set high expectations for 2007 and 2008.”

Boeing’s fourth-quarter revenue rose 26 percent to $17.5bn on double-digit growth in its Co

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