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20 Apr 06. The excellent results from U.S. Majors were overshadowed by new reported in Inside The Pentagon that the Defense Department is girding for a new round of fiscal belt tightening that could squeeze $25 billion from the Army across the Pentagon’s new six-year spending plan and force the ground service for a second consecutive year to choose between significant cuts in the size of its forces and scaling back key equipment modernization programs.

We had expected the slowdown to start this year in the run up to 2008, but Iraq war requirements has extended the budget to include UORs and new systems replacing worn out equipment. This has helped such companies as BAE in particular whose UDLP acquisition was seen as over-priced before it benefited from the huge Bradley Upgrade Program in particular.

We report results from Boeing, Lockheed Martin and Northrop Grumman, where the latter was the first to signal a slowdown with reduced profits. Northrop has been hit by contract wins at Lockheed Martin in particular that has made huge gains in its IT Segment in particular. On analysis, Boeing’s IDS segment alos reported declines.

On April 26th, Boeing’s first quarter profit jumped 29 percent on sky-high commercial aircraft sales.

Boeing reported a quarterly profit of $692m, or 88 cents per share, compared with $535m, or 66 cents per share, in the year-ago quarter.

Boeing’s commercial jet sales increased 48 percent to $7.1bn in the first quarter, as it delivered 98 planes, up from 70 planes in the year-ago period.

The August 2005 sale of Boeing Co.’s Rocketdyne business, coupled with strike-delayed launches, contributed to the firm’s Integrated Defense Systems unit recording a 5.5 percent drop in first-quarter revenue.

The company’s largest subsidiary, Integrated Defense Systems (IDS), recorded revenue of $7.19 billion, down from $7.61 billion a year prior, the company said Wednesday. In a release, Boeing attributed the decrease to “lower volume in proprietary and commercial satellite programs, strike-delayed launches, and the August 2005 sale of our Rocketdyne business.”

Boeing’s (NYSE: BA – News) IDS unit, based in St. Louis, is the area’s second-largest employer.

The Chicago-based firm reported profit for the first quarter ended March 31 grew to $692m on revenue of $14.3 billion, compared to profit of $535 million on revenue of $12.7 billion in the first quarter of 2005. Revenue rose 12 percent, despite lower sales at its defense division.

“Strong overall performance, combined with a significant increase in commercial airplane deliveries, drove this quarter’s results,” said Boeing Chairman, President and CEO Jim McNerney, in a statement. Boeing’s jetliner deliveries grew 40 percent during the first quarter.

Boeing’s backlog at the end of the quarter was a record $213bn, up 42 percent from a year earlier and 4 percent in the quarter. The growth primarily reflects the record 1,002 commercial airplane orders won during 2005 and the additional 176 orders received during the first quarter of 2006, the company said.

Boeing affirmed its 2006 outlook for revenue of $60 billion and earnings of $3.25 to $3.45 a share; it also backed a 2007 revenue estimate of $63.5bn to $64.5bn and earnings estimate of $4.10 to $4.30 a share. Overall revenue rose 12 percent to $14.3bn, from $12.7bn a year ago.

On April 25th, Lockheed Martin Corp.’s first-quarter 2006 profit was up 60 percent over the same period last year, helped by higher sales volumes in its segments, including its Dallas operations.

The defense contractor reported first-quarter net income of $591m, or $1.34 a share, compared to net income in 2005’s first quarter of $369m, or 83 cents a share.

Sales for the quarter hit $9.2bn — a 9 percent increase from the $8.5bn in sales recorded in the same period in 2005. Lockheed Martin (NYSE: LMT – News) has extensive operations in Dallas-Fo

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