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Boeing warns on sales
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October 18, 2001: 10:52 a.m. ET
Aircraft maker tops 3Q EPS target on weak sales and cuts future guidance.
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NEW YORK (CNNmoney) - Boeing Co. reported higher third-quarter profits Thursday, topping Wall Street forecasts, though it lowered its outlook for future sales.
The world's largest aircraft maker said it earned $713 million, or 88 cents a share, excluding special items, up from $623 million, or 72 cents a share, a year earlier. The results edged past average forecasts of 87 cents a share, according to First Call, which tracks analysts' estimates.
Sales rose to $13.7 billion from $11.9 billion but fell short of analysts' average forecasts of $14.4 billion.
The company lowered its guidance for full-year sales and profit margins for this year and 2002 due to the drop in demand for new commercial aircraft since the Sept. 11 attacks.
For 2001 it said it no longer is confident of its earlier $58 billion sales target. Analysts already had cut their revenue forecast to $57.5 billion for the year. It also said its operating margin for the year will be about 8.25 percent, rather than its earlier 9 percent target, and that free cash flow should be about $2.5 billion, well below the earlier range of $3.5 billion to $4.5 billion.
Boeing cut its 2002 revenue guidance to about $56 billion from its earlier target of $62 billion. Its dropped its cash flow target to about $3 billion from its earlier goal of more than $5 billion, and the profit margin is expected to be 8.25 percent rather than exceeding 9 percent.
The company said total aircraft deliveries this year should be 522, dropping to between 350 and 400 next year, and declining further in 2003. Many airlines facing a sharp drop in demand for air travel have cut their operations and dropped plans to buy new planes. Boeing said it is studying whether to halt production of its smallest commercial jet, the 717.
The company has taken a number of steps to cut costs, announcing plans to lay off 20,000 to 30,000 commercial aircraft workers. Those cuts resulted in after-tax special charges of $63 million, or 8 cents a share, in the third quarter. Including those special charges the company reported net income of $650 million, or 80 cents a share, in the latest period, up from $609 million, or 70 cents a share, a year ago. First Call did not exclude the year ago special charges.
Boeing (BA: down $0.56 to $33.14, Research, Estimates), one of 30 in the Dow Jones industrial average, lost $1.42 to $33.70 Wednesday. 
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