Boeing, Northrop Post Solid Results

Boeing Co. and Northrop Grumman Corp. on Wednesday posted sharply higher profits for the third quarter, as increased Pentagon spending on military electronics and computer systems boosted sales.

Boeing, the nation’s No. 2 defense contractor and largest commercial aircraft maker, said net income grew 78% to $456 million, or 56 cents a share, from $256 million, or 32 cents, in the year-earlier quarter.

The company got a boost from a tax benefit of 14 cents a share and other adjustments but still bested analysts’ average estimate of 40 cents a share.

Northrop, the third-largest defense company, reported net income of $278 million, or 76 cents a share, up 51% from $184 million, or 50 cents. Profit from continuing operations was 80 cents a share, beating analysts’ forecasts of 77 cents.

At Boeing, revenue was up 8% to $13.2 billion, while Northrop sales increased 11% to $7.4 billion.

Boeing, headquartered in Chicago, and Century City-based Northrop are the largest private employers in Southern California with a combined workforce of more than 60,000.

The third-quarter earnings reflected a surge in defense spending that has fueled a hiring boom for aerospace engineers and technical workers in the region.

Even with the outcome of Tuesday’s presidential election in doubt, both Boeing and Northrop said the outlook continued to be bright for defense-related work.

They said they expected to add a total of 4,000 to 6,000 workers to their payrolls this year.

“We continue to view the future with confidence,” said Ronald D. Sugar, Northrop’s chairman and chief executive. “Regardless of who gets elected next week, national security spending will be a high priority as we continue to wage the war on terrorism.”

Boeing Chief Executive Harry Stonecipher said he was “confident in the future” and that the company’s defense operations had a “very strong” quarter despite a federal ethics probe that has cast a long shadow over the business.

The Pentagon began reviewing several major Boeing contracts after a former high-level civilian official in the Department of the Air Force admitted Oct. 1 that she favored Boeing in several contract awards because the company gave jobs to members of her family.

Boeing’s defense business posted operating earnings before taxes and adjustments of $816 million, up 45% from $561 million last year, as revenue climbed 13% to $8.3 billion.

The growth in the defense business was fueled by strong results from the network systems unit, which saw a 39% jump in sales as work on a contract to develop and build a network of Army weapons and communications systems began ramping up.

A large portion of the development work is being handled by Boeing’s Huntington Beach operation.

Boeing’s military aircraft and support services also posted sharply higher operating profit, but its rocket and satellite business, based in El Segundo, continued to lose money.

The business unit, known as Launch and Orbital Systems, posted a loss of $153 million, most of which reflected higher costs of repairing technical problems with some of its commercial satellites.

Sales in Boeing’s commercial aircraft business dropped 8% to $6.3 billion. Still, the unit mustered an operating profit of $168 million on lower production costs.

As for Northrop, the growth in net income reflected improved results across all businesses.

Northrop develops a wide range of government products from aircraft carriers and nuclear submarines to the B-2 stealth bomber and computer networking systems.

Profit was fueled by a sharp boost in revenue from developing biomedical detection systems for the U.S. government, a new generation of destroyers for the Navy and a new ballistic missile defense system.

The latest results also included several small commercial electronic businesses that Northrop initially had sought to sell as part of a plan to shed non-defense-related operations after a string of acquisitions.

But Northrop said it planned to keep the businesses, which will boost revenue and earnings slightly this year.

Northrop also said it would spend $1 billion over the next 12 to 18 months to buy back shares.

Shares of Boeing gained 12 cents to $50.10, while Northrop jumped $1.04 to at $51.75. Both are traded on the New York Stock Exchange.