Lockheed Martin quarterly earnings jump 22 percent as sales surge

Lockheed Martin Corp., the world's largest military contractor, said today that its third-quarter earnings jumped 22 percent as sales and profit rose in each of the company's four operating units.

The Bethesda, Md.-based maker of fighter jets and other military equipment boosted its full-year earnings targets, based on the better-than-expected quarterly results and a reduction in expenses.

The company employs about 12,000 in the Philadelphia region.

Lockheed reported earnings of $766 million, or $1.80 per share, up from the $629 million, or $1.46 per share it posted in the year-ago quarter. Revenue came in at $11.1 billion, a 16 percent improvement over the 2006 third quarter result of $9.6 billion.

That easily beat the consensus of analysts surveyed by Thomson Financial, who expected Lockheed to earn $1.64 per share on revenue of $10.38 billion.

Lockheed notched up its 2007 outlook by five cents, saying it expects to earn between $6.70 and $6.85 on revenue between $41 billion and $41.75 billion. For 2008, Lockheed forecasts earnings between $6.95 and $7.15 per share.

Analysts are even more bullish going forward, predicting $6.87 per share earnings for 2007 on revenue of $41.69 billion. For 2008, earnings are forecast at $7.23 per share.

Bruce Tanner, the company's chief financial officer, said Lockheed expects a downturn in its aeronautics unit as big fighter programs like the F-16 are phased out and the new F-35 jet slowly ramps up. Lockheed has long said this would happen, but analysts may not be listening, he said.

"A lot of folks on the Street have discounted that and said we are not forecasting properly. I think we are," he said.

Lockheed and other military contractors have benefited from big boosts in defense spending as the Pentagon wages war in Iraq and Afghanistan. Yet some analysts suspect a peak may be near for Pentagon budgets as the 2008 presidential elections loom and the debate continues over when to withdraw troops from Iraq.

All of Lockheed's four business segments reported increases in sales for the third quarter.

Aeronautics posted a 16 percent increase in sales to $3.34 billion. That included higher sales in fighter jets and the C-130J transport plane programs.

Electronic systems, which makes missiles and other warfare equipment, was up 10 percent to $2.83 billion. Information systems and global services revenue rose 24 percent to $2.7 billion while Lockheed's space business was up 19 percent to $2.2 billion.

For the first three quarters of 2007, Lockheed earned $2.2 billion, or $5.21 per share, on revenue of $31 billion.

Shares of Lockheed fell 53 cents to $106.71 at the open of trading.