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Newport News 1Q improves
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April 13, 1999: 10:03 a.m. ET
Profit report comes amid speculation that Pentagon will reject takeover bid
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NEW YORK (CNNfn) - Newport News Shipbuilding Inc. said Tuesday first-quarter profit rose 14 percent, in line with expectations, citing more work and higher revenue from the refueling and overhaul of the Nimitz class of aircraft carriers.
The Virginia shipyard, the nation's only builder of nuclear-powered aircraft carriers and the target of a $1.4 billion hostile takeover bid by General Dynamics Corp., said it earned $18 million, or 50 cents per diluted share, in the quarter ended March 21. That compares with $16 million, or 44 cents a share, in the year-ago period.
Revenue rose to $430 million, up $33 million from a year ago.
Shares of Newport News (NNS) fell 3-1/16 Monday to 27-11/16 after investors became more doubtful that the Defense Department would approve General Dynamics' bid for the company. Shares of General Dynamics (GD) closed up 2-7/16 at 69.
The Pentagon is concerned that General Dynamics' bid, announced in February, wouldn't achieve the goal of ambitious cost savings without a significant loss of jobs, according to published reports.
One of the harshest critics of the deal is Virginia Sen. John W. Warner, chairman of the Senate Armed Services Committee, who is considered to be close to Defense Secretary William Cohen, the New York Times reported Tuesday.
Glenn Flood, a Pentagon spokesman, told the newspaper "we're getting close, we're talking days away" to a Pentagon announcement on the deal. "We haven't made a final decision; the review and analysis continues," he added.
During the first quarter, Newport News launched a $519 million stock purchase of Avondale Industries (AVDL), a New Orleans-based maker of Navy vessels. But the friendly merger has been put on hold while the Pentagon reviews General Dynamics' bid.
About 8,000 hourly workers at the 18,000-employee shipyard walked off the job earlier this month after the United Steelworkers of America local voted to reject a new contract offer. Salaried foremen have been filling in for the steelworkers while the strike continues. 
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