Make-Overs Fuel Gains at Lockheed, Rockwell

Reaping the benefits of major make-overs, defense giant Lockheed Martin Corp. and commercial electronics powerhouse Rockwell International--not long ago a formidable defense contractor itself--posted strong quarterly results Tuesday.

Both stocks rose on moderate trading on the strength of the earnings reports.

Lockheed Martin was up $2.875 a share to close at $88.50, a 3.3% gain, and Seal Beach-based Rockwell was up $3.25 to close at $65.625, a 5.2% gain. Both trade on the New York Stock Exchange. Analysts said both companies performed better than expected.

Lockheed Martin reported first- quarter profit of $290 million, or $1.49 a share, a 6.6% increase from $272 million in its first quarter last year. Sales for the period rose to $6.7 billion from $4.1 billion.

The Bethesda, Md., company has been gobbling up defense electronics companies for several years. Last year, it nearly doubled the size of its electronics unit with the $9-billion purchase of most of New York-based Loral Corp.

A radically restructured Rockwell International posted a gain of 18.2% in fiscal second-quarter profit from its continuing operations, led by strong performances from its automation and aircraft electronics units.

Profit from the company’s four continuing operations rose to $189 million, or 87 cents per share, from $160 million a year earlier. Revenue for the fiscal second quarter ended March 31 increased 4% to $2.7 billion, from $2.6 billion.

Profit growth far outstripped sales gains because the company was able to cut operating costs while increasing profit margins, said Chairman Donald R. Beall.

He said automation equipment sales were especially strong overseas.

Rockwell’s performance would have been even better but for weaker performances by its Newport Beach-based semiconductor unit--where profit dropped 13% because of the costs of developing a new super-fast modem chip--and its automotive parts business, which reported a 12.8% dip in second-quarter profit.

Rockwell, which has already divested itself of its defense, aerospace and commercial graphics units, intends to spin off the Michigan-based automotive unit into a separate, publicly traded company later this year. The firm said the businesses don’t fit its focus on commercial electronics.

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