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Lockheed warns of 2Q loss
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June 9, 1999: 2:12 p.m. ET
Defense contractor sees 10-15 cents a share deficit, says '99 earnings to fall
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NEW YORK (CNNfn) - Lockheed Martin Corp. said Wednesday it expects to post a loss in the second quarter because of rising costs, rocket launch failures and lower productivity. Investors reacted by sending the company's stock price tumbling.
Shares of the aerospace and defense contractor were down 6-1/16 at 34-3/8 by early afternoon. The stock had fallen as low as 33-3/4 at one point.
For the second quarter of 1999, Lockheed (LMT) said it expects to lose 10 cents to 15 cents per diluted share, compared with the consensus estimate of a 72-cent-per-share profit by analysts polled by the earnings tracker First Call Corp.
The company also cut its profit outlook for the rest of 1999 and 2000. The company said it expects to earn about $1.50 per diluted share in 1999, compared with First Call estimates of $3.10 per share. For 2000, the company said it should earn at least $2.15 per share, compared with analyst predictions of $3.39. The figures exclude non recurring and unusual items.
For all of 1998, Lockheed posted earnings of $3.11 per share.
"Clearly our forecasts about some key programs have not been realized, and we have not executed consistently across the corporation to our expectations," said Vance Coffman, Lockheed Martin chairman and CEO.
The Bethesda, Md.-based company said reduced production and delivery delays of its C-130J series planes will account for about $275 million in reduced net earnings for 1999, the equivalent of 70 cents per share. The company said the annual production rate for the C-130J has been cut to between 16 and 19 aircraft, down from the previous projection of 24 planes.
Lockheed also cited delays in rocket launches and satellite delivery failures and reduced the number of Atlas launch vehicles it will launch this year to 8 from the 10 to 12 range.
Last month, the company appointed an independent panel to review its operations after a series of rocket and satellite failures caused losses of $4 billion. The panel's recommendations are due Sept. 1.
The earnings revision comes a week after Lockheed reduced the work force of its aeronautical systems division by 2,000. Those cuts came less than three months after the company announced a 10 percent employee reduction in its astronautics unit. 
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Lockheed
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