Thursday, December 24, 1998

Lockheed lowers earnings outlook

BETHESDA, Md. (AP) — Lockheed Martin Corp. expects fourth-quarter earnings to fall below analyst expectations due to a drop in sales and expenses associated with its CalComp Technology subsidiary.

The defense contractor predicted today that for all of 1998 diluted earnings per share, excluding one-time items, will rise between 2 percent and 4 percent.

The company forecast that fourth-quarter earnings would be down about 10 percent from $1.79 a share a year ago. Analysts surveyed by First Call Corp. have predicted the company would earn $2.06 a share for the quarter.

Financial results for the quarter and full year will be released the week of Jan. 25.

Wall Street was unhappy with the news. Lockheed stock was down $8 to $87 a share in late morning trading on the New York Stock Exchange.

Lockheed blamed the lower earnings outlook on a drop in sales stemming from a lull in commercial space activities, delayed space launches and delayed C-130J deliveries from 1998 into 1999.

The company also noted that total fourth-quarter pretax charges for CalComp are expected to range from about $150 million to $200 million.

“We are redoubling our efforts to aggressively reduce our cost base, improve margins, and increase free cash flow ...,” Vance Coffman, chairman and chief executive officer, said in a statement.

Fourth-quarter diluted earnings per share will be 10 percent lower than the $1.79 per share earned a year ago, the company said.

But Lockheed was optimistic about 1999. It said it expects diluted earnings per share to resume a low double-digit growth rate for next year, with estimated annual sales growth in the mid-single digits.

Lockheed said it expected that over the five-year period, 1999-2003, it will achieve mid-single digit annual sales growth, overall margin improvement, low double-digit annual earnings per share growth, and between $8 billion and $9 billion of free cash flow for the period.

Lockheed Martin had 1997 sales surpassing $28 billion.