Boeing 1st-Quarter Profit Falls 23%

Boeing Co. said Wednesday that its first-quarter profit fell 23% as a 40-day strike by engineers slashed production, but the decline wasn’t as severe as investors had expected.

Profit from operations dropped to $359 million, or 41 cents a share, from $469 million, or 50 cents, a year ago, beating the 35-cent average estimate of analysts surveyed by First Call/Thomson Financial. Sales fell 31% to $9.91 billion.

Chairman Phil Condit said Boeing should deliver most of a strike-related backlog of aircraft by the end of the second quarter, suggesting limited damage to a year-old turnaround of the company’s jetliner division.

Boeing shares jumped $2.50, or 6%, to close at $37.25 on the New York Stock Exchange.

“It’s still a show-me story but the evidence is continuing to mount that they are making progress,” said Bill Whitlow, a fund manager with Safeco Asset Management Co., which owned almost 360,000 Boeing shares as of December.

The strike cut the quarter’s jetliner deliveries to 75, about 50 fewer than planned. It left Boeing without many of the workers who inspect aircraft, filling company airfields in Seattle with undelivered planes.

The jetliner division boosted its operating profit margin to 5% from 3.9%--even as the strike temporarily left Boeing without about 17,000 engineer-related workers and delayed $2.5 billion in sales.

Condit said Boeing is taking less time to design and manufacture parts on its assembly lines, as well as trimming overhead and shutting unneeded factory space. Job cuts and lower research spending also helped boost the jetliner division’s bottom line.

Some engineers have contended Boeing is cutting research spending to boost earnings--a charge denied by Chief Financial Officer Deborah Hopkins. She said the quarter marked the trough of long-expected declines in research spending after the company finished some new jetliners and prepares to start developing others, such as longer-range 777s.

At a Glance

Other earnings, excluding one-time gains or charges unless noted, include:

AEROSPACE/DEFENSE:

* General Dynamics Corp.’s first-quarter earnings rose 16% to $184 million, or 91 cents a share, led by a 35% profit jump at its Gulfstream corporate jet unit and acquisition-fueled gains in information systems. Analysts expected 88 cents. Revenue gained 28% to $2.55 billion.

* Raytheon Co. said first-quarter earnings plunged 67% to $80 million, or 24 cents a share, in line with analyst forecasts, as revenue fell 2.5% to $4.23 billion.

* Textron Inc.’s first-quarter profit rose 9% to $158 million, or $1.06 a share, in line with forecasts. Revenue rose 18% to $3.24 billion. with increases in all divisions.

* United Technologies Corp. said first-quarter profit rose 36% to $377 million, or 74 cents a share, led by gains in its Flight Systems unit, which includes Sikorsky and Hamilton Sundstrand. Profit beat the consensus estimate of 72 cents. Profit also grew in the Otis and Carrier units and edged up sightly at Pratt & Whitney.

AIRLINES:

* America West Holdings Corp. said first-quarter earnings plunged 81% to $5 million, or 15 cents a share, well below expectations of 26 cents, as the airline struggled with canceled flights and higher fuel costs. Revenue rose 8.3% to $562.9 million.

* UAL Corp., parent of United Airlines, reported an unexpected rise in first-quarter profit as travel demand in March helped the world’s largest airline company overcome higher jet-fuel costs. Profit grew 2.1% to $191 million, or $1.61 a share, well beyond analyst forecasts of $1.37 a share. Revenue rose 9.3% to $4.55 billion, helped by two industrywide fare increases on U.S. tickets in the quarter.

DRUGS:

* American Home Products Corp. said first-quarter earnings rose 18% to $634.9 million, or 48 cents a share, as strong demand for new drugs such as the sleeping pill Sonata and the vaccine Prevnar pushed pharmaceutical sales up 16% to $2.7 billion. Revenue rose 14% to $3.3 billion.

* Warner-Lambert Co. said first-quarter profit rose 35% to $516 million, or 58 cents a share, boosted by a 46% jump in sales of Lipitor, the No. 1 cholesterol drug in the United States. Revenue grew 13% to $3.41 billion. Analysts were expecting 56 cents.

OTHER INDUSTRIES:

* Avon Products Inc.’s profit crept up 2.5% to $74.8 million, or 31 cents a share, a penny better than estimates, as sales rose 9.2% to $1.32 billion.

* Chase Manhattan Corp.’s first-quarter profit rose 16% to $1.36 billion, or $1.59 a share, as its purchase of investment bank Hambrecht & Quist helped double fees from advising on mergers. Venture capital gains also helped, though less than in the fourth quarter. Non-interest revenue rose 35% to $3.96 billion.

* DaimlerChrysler’s profit rose 3% to about $1.62 billion, or $1.62 a share, edging out Wall Street estimates of $1.58 a share. The German-American auto maker said operating profit in the Chrysler division fell 7% as the company rolled out rebates, discounts and other incentives. Revenue grew 17% to about $39.2 billion.

* Harrah’s Entertainment Inc. said first-quarter profit fell 18% to $30.7 million, or 25 cents a share, as gamblers won more at its Rio Suite Hotel & Casino in Las Vegas. Revenue was up 10% to $783.6 million. Harrah’s said last week that bad luck at the Rio’s gambling tables cut first-quarter profit 9 cents a share to between 24 cents and 26 cents. Before then, analysts were expecting 29 cents.

* ITT Industries Inc., the world’s No. 1 water and sewage pump maker, said first-quarter profit rose 21% to $51.3 million, or 57 cents a share, beating estimates by two cents, on higher sales of its pumps as well as telecommunications switches and connectors. Revenue from ongoing segments rose 11% to $1.21 billion.

* Lear Corp., the world’s largest maker of automotive seats and interiors, said first-quarter profit rose 23% to $62 million, or 93 cents a share, beating forecasts by 2 cents. Sales rose 42% to $3.81 billion, reflecting Lear’s acquisition of United Technologies Corp.’s UT Automotive unit last May.

* Liz Claiborne Inc.’s first-quarter profit rose 4% to $46.5 million, or 84 cents a share, well beyond the 78 cents analysts expected, as sales grew 16% to $809.5 million. Net income included a pretax gain from the sale of stock of $3 million, or 3 cents.

* Mirage Resorts Inc. said its profit surged 74% in the first quarter to $55.8 million, or 28 cents a share, with higher cash flow from its Beau Rivage casino in Mississippi and Mirage casino in Las Vegas. Profit before expenses related to its acquisition by MGM Grand and the costs of developing new casinos was 31 cents a share, topping the 24-cent average estimate of analysts polled by First Call/Thomson Financial. Revenue rose 13% to $663.5 million.

* Nabisco Holdings Corp. said first-quarter profit rose a higher-than-expected 33% to $60 million, or 22 cents a share, two cents better than forecasts, as new products and acquisitions boosted sales. Revenue rose 12% to $2.07 billion. The nation’s top maker of cookies and crackers also said analysts’ forecasts for second-quarter earnings may be conservative and that it expects profit for the year to be at the high end of estimates. The Parsippany, N.J.-based company is expected to earn 32 cents a share in the second quarter and $1.50 to $1.55 for the year, according to First Call.

* PepsiCo Inc. said first-quarter profit grew 10% to $422 million, or 29 cents a share, penny better than estimates, as higher sales of Frito-Lay snacks and Tropicana juices made up for a drop in profit from Pepsi-Cola beverages. The year-earlier figures were adjusted to reflect the initial public offering of Pepsi Bottling Group Inc. and other items. Pepsi-Cola North America raised prices earlier this year, hurting sales and profit. Total sales rose 7.9% to $4.19 billion.

* Yellow Corp. said first-quarter earnings more than doubled to $10.5 million, or 41 cents a share, from $4.78 million, or 19 cents, a year ago, as the nation’s largest trucking company benefited from higher rates and more shipments. The results exceeded analyst forecasts of 36 cents. Revenue rose 21% to $882.1 million.

Reuters was used in compiling this report.

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Earnings Preview

A sampling of companies expected to report today, ranked by year-over-year earnings-per-share (EPS) growth, compiled by First Call/Thomson Financial.

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Ticker Analysts’ Year-ago Predicted Company symbol estimated EPS quarter pct. chg. Sunoco SUN $0.54 $0.13 +315% Nucor NUE 0.96 0.32 +200 Rainbow Tech RNBO 0.18 0.10 +80 Andrew ANDW 0.16 0.09 +78 Xilinx XLNX 0.21 0.13 +62 GBC Bancorp GBCB 0.68 0.47 +45 Union Pacific UNP 0.70 0.52 +35 Fortune Brands FO 0.41 0.32 +28 UnionBanCal UB 0.82 0.65 +26 Times Mirror TMC 0.75 0.60 +25 Franklin Resources BEN 0.55 0.44 +25 Perkin Elmer PKI 0.38 0.31 +23 99 Cents Only NDN 0.23 0.19 +21 Reliance Steel & Aluminum RS 0.54 0.45 +20 Quaker Oats OAT 0.60 0.51 +18 Microsoft MSFT 0.41 0.35 +17 Schering-Plough SGP 0.42 0.36 +17 Baxter International BAX 0.64 0.55 +16 Coors RKY 0.37 0.32 +16 Praxair PX 0.67 0.58 +16 Leggett & Platt LEG 0.38 0.33 +15 PPG Industries PPG 0.92 0.81 +14 Bristol-Myers Squibb BMY 0.60 0.53 +13 Union Planters UPC 0.71 0.63 +13 Knight Ridder KRI 0.73 0.65 +12 Ecolab ECL 0.29 0.26 +12 Black & Decker BDK 0.49 0.44 +11 BellSouth BLS 0.51 0.46 +11 Consolidated Edison ED 0.84 0.76 +11 Cooper Industries CBE 0.87 0.80 +9 Amgen AMGN 0.25 0.23 +9 Duke Energy DUK 0.89 0.83 +7 UST UST 0.63 0.60 +5 International Flav/Frag IFF 0.48 0.46 +4 Deluxe DLX 0.61 0.59 +3 Ryder System R 0.32 0.31 +3 Quintiles Transnational QTRN 0.32 0.31 +3 Peoples Energy PGL 1.58 1.56 +1 Diagnostic Products DP 0.33 0.33 0 Central & South West CSR 0.20 0.21 -5 KeyCorp KEY 0.54 0.57 -5 IndyMac Mortgage Hldgs NDE 0.28 0.30 -7 Gillette G 0.22 0.24 -8 CMS Energy CMS 0.68 0.80 -15 Fort James FJ 0.44 0.53 -17 Allstate ALL 0.65 0.81 -20 Edison International EIX 0.30 0.40 -25 IDEC Pharmaceuticals IDPH 0.07 0.10 -30 Newhall Land & Exploration NHL 0.17 0.25 -32 K-Swiss KSWS 0.59 1.15 -49 Critical Path CPTH -0.41 -0.77 NM Exodus Communications EXDS -0.26 -0.14 NM Silicon Graphics SGI -0.07 -0.23 NM Burlington Resources BR 0.35 0.00 NM

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Notes: NM = not meaningful. A loss in any period makes percentage change not calculable.

Year-over-year growth and percentage changes are based on earnings-per-share figures and may differ from percentage changes based on total profit.

For more information on First Call, check https://www.firstcall.com.