Boeing’s Cost-Cutting Helps Push Up Profit

Boeing Co. said Wednesday that its profit soared 52% in the fourth quarter as the world’s biggest airplane maker shed jobs, cut research spending and slashed overtime in its commercial jet division.

Net income rose to $662 million, or 74 cents a share, from $435 million, or 45 cents, a year ago. Sales fell 11% to $15.2 billion from $17.1 billion on a decline in jet deliveries.

The earnings beat the average analyst estimate of 68 cents a share in a First Call/Thomson Financial survey, the fifth consecutive quarter Boeing has topped the forecast. Some unofficial estimates were as high as 73 cents.

Income in the jet division climbed to $698 million from $54 million even as sales declined 18% to $10 billion from $12.3 billion.

The earnings rebound prompted Boeing to raise its forecast for this year’s profit margins and sales.

After struggling in 1997 and 1998 with production bottlenecks, Boeing Chairman Phil Condit is focusing on boosting profit and backing away from a price-cutting war with European rival Airbus Industrie.

Boeing boosted its projection for this year’s operating margin, the percentage of sales left after expenses are subtracted, to about 7% from 5.5% to 6.5%. It forecast an operating margin of about 8% in 2001.

The Seattle-based company also raised its forecast for sales this year to $50 billion from $49 billion and boosted its forecast for jet deliveries to 490 from 480. It expects to deliver about 490 jets again in 2001.

The figures still mark a steep decline from sales of $58 billion and 620 jets in 1999, the peak of a five-year boom in aircraft orders. The fallout from Asia’s recession and higher fuel prices are now expected to delay purchases, though Boeing’s executives said they see encouraging signs.

Boeing is seeing “renewed interest” in its 747 jumbo jet and might raise the production rate by the end of this year or early next year, Condit told analysts on a conference call. It could also get enough orders to start production of a longer-range version of its 777 before an air show this July in Farnborough, England, Condit said.

Some analysts said they’re still unconvinced that the renewed strength in Asia will be enough to offset a slump in the market. Airlines are still trying to digest the aircraft purchases they’ve already made and now face higher fuel prices.

Boeing shares rose $2.63 to close at $47.63 on the New York Stock Exchange after they touched $48.13 earlier in the day, the highest since July 15.

At a Glance

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

AIRLINES:

* United Airlines parent UAL Corp. said operating profit grew 22% in the fourth quarter to $230 million, or $1.91 a share, beating estimates of $1.75 in a First Call/Thomson Financial analyst poll, on higher average fares and international traffic. UAL, the world’s largest carrier, is the only airline operator so far to report profit amid soaring fuel prices. Revenue rose 4.7% to $4.48 billion. UAL was able to hold down fuel cost increases with improved hedging, but the company said it expects higher fuel costs to dampen first-quarter results. UAL also has been better able to raise fares in key hubs, analysts said.

* AMR Corp., parent of American Airlines, said operating profit fell 37% in the fourth quarter to $105 million, or 69 cents a share, but the results exceeded the 61-cent average analyst estimate in a First Call/Thomson Financial poll. The company blamed higher fuel costs and travelers’ Y2K fears for the weakness. Revenue rose 7.6% to $4.49 billion.

FINANCIAL SERVICES:

* Ameritrade Holding Corp. said it lost $16.1 million, or 9 cents a share, on continuing operations in its fiscal first quarter as it increased advertising in a bid to sign up new accounts. The Internet brokerage had a profit of $4.4 million, or 3 cents a share, a year ago. Ameritrade was expected to earn 12 cents a share, according to a survey of 12 analysts by First Call/Thomson Financial. Revenue more than doubled to $110.9 million from $52.1 million.

* Bear Stearns Cos.’s profit climbed 87% in its fiscal second quarter to $235.3 million, or $1.64 a share, beating Wall Street’s highest estimate of $1.30 a share, as trading at the securities firm recovered from a corporate bond rout a year ago and a mergers boom boosted investment banking fees. Revenue rose 39% to $1.43 billion. Trading revenue was up 45% and investment banking revenue jumped 67%.

* Chase Manhattan Corp. said profit grew 46% in the fourth quarter to $1.68 billion, or $1.97 a share, well above the average analysts’ estimate of $1.32 a share from a First Call/Thomson Financial survey. Venture capital investments in Internet and other start-up companies and fees from investment banking boosted earnings at the nation’s second-largest bank. Non-interest revenue rose 39% to $4.04 billion as investment banking fees rose 31% to $499 million on loans to corporate clients, mergers advisory and bond underwriting.

* Donaldson Lufkin & Jenrette’s profit more than doubled in the fourth quarter to $191.2 million, or $1.35 a share, from $68.7 million, or 47 cents a share, beating estimates of $1.11, as revenue jumped 73% to $1.7 billion. The securities firm’s net revenue rose 66% to $2.14 billion. Trading revenue and fees from mergers and acquisitions climbed. DLJdirect, the firm’s online brokerage service, lost $2 million, or 2 cents a share, contrasted with a profit of $1.8 million, or 2 cents, a year ago as revenue more than doubled to $76.3 million. Analysts were expecting a much larger loss of 5 cents.

* ETrade Group Inc. posted a smaller-than-expected loss from continuing operations of $38.1 million, or 15 cents a share, in the fiscal first quarter as customers’ daily trades rose 65% and it added 330,000 accounts. The online brokerage lost $11.6 million, or 5 cents a share, in the year ago quarter when it spent $55 million on sales and marketing. In the latest quarter, it spent $119 million on sales and marketing. Analysts were expecting a loss of 21 cents. Revenue jumped 42% to $246 million.

OTHER INDUSTRIES:

* Hertz Corp. said fourth-quarter earnings jumped 26% to $60.3 million, or 56 cents a share, beating estimates by 2 cents, on more car and construction equipment rentals and higher rates. Revenue rose 10% to $1.17 billion.

* Honeywell International Inc. said fourth-quarter operating profit rose 12% to $630 million, or 78 cents a share, matching analyst estimates. Revenue slipped 1% to $6.16 billion. Sales excluding acquired companies grew 1%, short of the company’s forecast last month of as much as 3%.

* Visx Inc., the No. 1 maker of lasers used to correct vision, said its fourth-quarter earnings jumped 50% to $25.8 million, or 38 cents a share, as revenue climbed 79% to $75.1 million. The results missed the average estimate of analysts polled by First Call but fell short of forecasts of as much as 41 cents a share.

Associated Press was used in compiling this report.