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Lockheed’s 2Q earnings rise 56 perfcent

By Stephen Manning Ap Business Writer 3 min read

COLLEGE PARK, Md. (AP) – Lockheed Martin Corp.’s second-quarter earnings leapt 56 percent, as the defense contractor best-known for its fighter jets showed Tuesday how it has swiftly adapted to supply a transforming military that fights fewer dogfights but hungers for high-tech gear to find and fight today’s elusive enemies. Lockheed, the nation’s largest defense contractor, has made a push to build up its government information-technology business and electronic-systems unit, which makes products like surveillance systems and missiles.

Higher sales spurred by recent investments in this segment helped offset a dip in fighter jet sales.

Bethesda, Md.-based Lockheed also raised its full-year earnings outlook above Wall Street’s expectations.

Lockheed reported second-quarter earnings of $461 million, or $1.02 per share, up from $296 million, or 66 cents per share, in the second quarter of 2004. Sales rose 6 percent to $9.3 billion from $8.8 billion a year ago.

Analysts surveyed by Thomson Financial expected Lockheed would earn 83 cents per share in the quarter with projected revenue of $9.12 billion.

The results were helped by a $27 million gain related to its investment in satellite network operator Inmarsat, which bolstered earnings by 6 cents per share.

Sales in the systems and IT group rose 17 percent to $4.79 billion in the quarter. Combined, Lockheed’s IT and systems units account for more than half of the company’s sales.

“They should definitely be looked at as a broad based defense firm in every area,” said Paul Nisbet, an analyst with JSA Research.

Lockheed’s core business, aeronautics, saw an 8 percent drop in revenue for the quarter, a decline the company attributed to lower sales of F-16 jets. Second-quarter aeronautics sales were $2.9 billion, down from $3.1 billion a year earlier.

However, the segment’s profit rose to $245 million from $239 million on earnings from an increase in C-130J transport plane deliveries.

Lockheed Chief Financial Officer Christopher Kubasik said the decline was expected, as the aging F-16 is gradually phased out and Lockheed’s newest planes, the F/A-22 and F-35 Joint Strike Fighter, aren’t yet being produced in large numbers. The Defense Department has also proposed making deep cuts in the number of F/A-22s originally planned to save money.

“That trend will continue for the full year,” he said of the lower sales. “There is no surprise from my perspective.”

For the first six months of 2005, Lockheed reported earnings of $830 million, or $1.85 per share, up from $587 million, or $1.31 per share, in the first half of 2004. First-half revenue stood at $17.8 billion.

Lockheed forecast full-year earnings of $3.60 to $3.75 per share, on sales between $36.5 billion to $38 billion.

Analysts’ full-year estimate is $3.54 per share on revenue of $37.51 billion. In April, Lockheed had forecast 2005 earnings of $3.35 to $3.55 per share, on sales ranging from $36.5 billion to $38 billion.

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