|
Northrop sees weaker '98
|
 |
July 15, 1998: 3:52 p.m. ET
Defense giant reports 14 % decline in profits due to unexpected charges
|
NEW YORK (CNNfn) - Northrop Grumman Corp., which is in the midst of its much-scrutinized $9 billion merger with Lockheed Martin Corp., said second-quarter net income fell 14 percent, due in part to $37 million of unexpected charges.
In addition, the Los Angeles-based defense giant said increased costs and parts shortages will hurt earnings for the remainder of the year.
"Because of these charges the company now estimates diluted earnings per share for 1998 in the range of $6.50 to $6.75, not including merger-related expenses," said Richard B. Waugh Jr., Northrop Grumman corporate vice president and chief financial officer.
Analysts had anticipated profits of $7.11 a share for 1998, according to First Call.
Northrop's stock (NOC) was down 2-7/8 to 102-9/16 Wednesday afternoon in trading on the New York Stock Exchange.
For the quarter ended June 30, the Los Angeles defense giant reported net income of $93 million, or $1.34 a share, compared with $108 million, or $1.59 per share, in the second quarter of 1997.
On an operating basis, profits declined 3.8 percent to $251 million.
The consensus estimate was $1.73 a share. Comparable per-share figures weren't immediately available.
Sales for the quarter totaled $2.1 billion, down slightly from the $2.2 billion in the same period a year ago.
The company said $37 million of charges arose in the latest quarter in part from previously announced plant closures and cost increases on two electronics programs.
Northrop acknowledged it is taking longer than anticipated to refurbish older 707 jetliners used in its E-8C Joint STARS program.
But the second-quarter charge also relates to increased costs incurred to overcome parts shortages on the E-2C surveillance aircraft program.
Northrop already has taken $180 million of charges in March for costs linked to its proposed Lockheed merger, which is being challenged by the Justice and Defense departments. Trial is set to begin Sept. 8.
At the company's annual meeting earlier this month, Chairman and Chief Executive Kent Kresa projected that production cuts by Boeing Co. could cause as much as $200 million in lost revenue in fiscal 1999. About $50 million in sales will be affected in 1998.
For the first half of the year, Northrop's net income plunged 57.8 percent to $81 million, or $1.17 a share, on revenue of $4.1 billion.
|
|
|
|
|
|
Northrop Grumman
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
