Boeing Posts Strong Profit Despite Federal Investigations
Boeing Co., despite investigations of some of its military contracts, reported a better-than-expected profit Wednesday due largely to robust sales to the Pentagon. The aerospace giant also raised its earnings forecast for the next two years.
Its first-quarter profit was $623 million, or 77 cents a share, contrasted with a loss of $478 million, or 60 cents a share, a year earlier, when it took a $913-million charge to write down goodwill from earlier acquisitions. Revenue climbed 6% to $12.96 billion compared with $12.26 billion last year.
“We had a very good quarter and a great start for the year,” Chief Executive Harry Stonecipher said.
In recent days, Boeing has been scrambling to mitigate reports that federal prosecutors have broadened their criminal investigation into Boeing employees’ pilfering of proprietary documents from rival Lockheed Martin Corp. Boeing has been under investigation since last summer over allegations that it used Lockheed documents to help it to win a multibillion-dollar Air Force rocket contract. Boeing has been suspended from bidding on future rocket work.
Boeing executives continued to assert Wednesday that the ethical lapses were committed by a handful of employees. Still, the first question posed to Stonecipher during a teleconference call with analysts centered on the ethics probes.
“I don’t think it’s distracting me totally, but it’s certainly frustrating,” said Stonecipher, who was named chief executive after Phil Condit abruptly resigned last December. “I’m dealing with the problems one at a time.”
James Albaugh, head of Boeing’s defense business, said he didn’t know whether “another shoe could drop” or when the current investigations would be completed.
“We’ve had outside and internal investigations and have gone through every shred of evidence and have turned over everything we have,” he said.
Boeing said the improved outlook for both defense and the commercial aircraft business prompted it to revise its earnings forecast for the year to $2.05 to $2.25 a share, up from earlier estimates of $1.75 to $1.95.
For 2005, the company said earnings are likely to be in the range of $2.20 to $2.45 a share, up about 25 cents from prior forecasts.
Some analysts, however, cautioned that Boeing’s forecast assumes its controversial $24-billion contract to provide the Pentagon with 100 aerial refueling tankers would be approved. The deal has been under intense scrutiny in recent months.
Boeing previously said it would have to take a $310-million charge if the tanker deal were to fall through.
Shares of Boeing closed up 48 cents Wednesday at $44.03 on the New York Stock Exchange.
