Westinghouse posts drop in 1st-quarter operating income

April 14, 1993|By Ted Shelsby | Ted Shelsby,Staff Writer Bloomberg Business News contributed to this article.

Westinghouse Electric Corp. yesterday reported that first-quarter operating income fell slightly, partly because of a sharp drop in defense contracts at its Electronic Systems Group in Linthicum.

Westinghouse, based in Pittsburgh, posted a profit of $64 million, or 15 cents a share, from continuing operations for the period, down from $65 million, or 19 cents a share, in the year-ago quarter. Net income was $64 million, compared with a loss of $246 million in the first quarter last year, when the rTC company took a $338 million, or 99-cents-a-share, after-tax charge from the adoption of new accounting standards.

"Electronic Systems was one of the company's bigger problems" in the three months that ended March 31, said Judy A. Meehan, an analyst who follows the company for Pittsburgh-based Parker Hunter Inc.

Based on information the company shared with analysts, she said, sales of the local division were down between 5 percent and 10 percent, and operating profits were down more than 20 percent.

Noting that nondefense sales represented just 27 percent of Electronics Systems' sales, Ms. Meehan said, "They're really going to have to grow on the commercial side."

Although the company does not release quarterly statistics for its operating divisions, Westinghouse said revenue and operating profits ofElectronic Systems "were down substantially" because of the divestiture of two units last year and lower revenue from defense contracts.

Pentagon business was particularly weak in the first quarter, said Jay A. McCaffrey, a Westinghouse spokesman. "But the first quarter does not make an entire year. We don't expect the first quarter to be reflective of the whole year."

The company, which lost a combined $2.38 billion in 1991 and 1992, is implementing a three-year restructuring plan to erase $6 billion in debt and leave the financial services business. The company took a big step toward recovery April 8, when it agreed to sell its tattered commercial real estate portfolio for $1 billion to a partnership it formed with Lehman Bros.

"Last week's announcement of the asset sale at WFSI accelerates the implementation of our comprehensive plan," Gary M. Clark, president and acting chief executive, said. "We are now well ahead of schedule, and we expect to remain ahead of our plan throughout the year."

Mr. Clark said first-quarter results were "as expected."

"Our objective remains to have improved operating results for the full year compared to 1992, with improvement occurring in the second half of 1993," he said.

Although Ms. Meehan agreed that there were no big surprises in the first quarter, she was not as optimistic about the rest of the year. "Whether they can outperform last year remains a question," she said.

Looking at what she called "bright spots," she noted that the operating profits of the broadcast division were up between 5 percent and 10 percent and that the company has come a long way in ridding itself of its troubled real estate assets.

The company said revenue and operating profits were flat for the environmental segment and down slightly for its industries segment. Revenues and operating profits for power systems were up substantially, partly from increased nuclear fuel revenue.

Westinghouse

Electric Corp.

E5 .. .. .. .. .. ...Ticker.. .. .. .. ..Yesterday's .. .. .. .. .. .. .. Symbol.. .. .. ... Cls... .. .. .. Chg.

.. .. .. .. .. .. WX .. .. .. .. .. .15 1/4 .. .. .. .. . +

Period ended

March 31.. .. .. .. ..1st qtr.. .. .. .. ..Year ago.. .. .. .. .. Chg.

Revenue .. .. .. .. ..$1,859,000.. .. .. ..$1,854,000.. .. .. .. ..+0.3%

Net Income .. .. .. ..$64,000 .. .. .. .. ..($246,000) .. .. .. .. ...--

Primary EPS .. .. .. .. $0.15 .. .. .. .. .. .. $(0.71) .. .. .. .. ..--

Figures in thousands (except per share data.)

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