Rockwell Aims to Boost Earnings During Next 5 Years : Aerospace: The goal to increase per-share income by 12% annually is optimistic, considering the outlook for the defense industry.
Rockwell International Chairman Donald R. Beall told shareholders Wednesday that the firm has set an objective to increase its earnings during the next five years by 12% annually on a per-share basis, a goal that defies the dismal outlook confronting the defense industry.
Beall has been on a tireless campaign lately to persuade the financial community and the news media that Rockwell is no longer just a defense contractor but has become a more diversified manufacturing company that faces bright growth prospects in a variety of commercial fields.
In addition to setting the profit-growth objective, Beall said, the company is seeking to earn a 16% to 22% return on shareholder equity in the 1990s.
Defense Department contracts generated just 27% of Rockwell’s 1989 sales, while domestic commercial sales were up to 32% last year, Beall said at the firm’s annual meeting in Los Angeles on Wednesday.
Beall predicted that El Segundo-based Rockwell’s $4.9-billion-a-year electronics business, generating 39% of the firm’s sales in 1989, will be the fastest-growing part of the firm in the next few years. The company is also expecting growth in its vehicle components segment, its printing press business and even its defense business, Beall said.
But the electronics business has experienced problems, Beall disclosed. The firm’s telecommunications business, which involves building modems for facsimile transmitters and for personal computers, had an inventory glut develop last year, Beall said.
When sales of facsimile machines and personal computers turned down last year, Rockwell inventories of modems grew out of balance. There were also performance problems of Rockwell products and some products were late in entering the market, he said.
Beall declined to say whether the firm was forced to write off inventory, but he pointed out that Rockwell has very “conservative” accounting practices in such matters, implying that it did take a writeoff. Beall said the firm replaced several general managers in the telecommunications area.
On another matter, Beall declined to comment on whether Rockwell is negotiating to acquire Marquardt, a San Fernando Valley producer of specialty rocket motors. The issue arose when a shareholder asked if a deal had been consummated, drawing a “no comment” from Beall.
