Lockheed is upbeat despite a large loss

Minus $1.5 billion viewed as the price of a stronger future

January 26, 2002|By Robert Little | Robert Little,SUN STAFF

Lockheed Martin Corp. posted a $1.5 billion fourth-quarter loss yesterday, suffering the first expenses of a corporate streamlining effort that officials say will ultimately strengthen the company.

The Bethesda-based defense giant's loss was $3.49 per share, compared with a loss of 21 cents per share in the fourth quarter of 2000. Quarterly revenue was virtually unchanged, at $7.3 billion.

Nearly all of the loss was attributed to the one-time expense of exiting the telecommunications business, a cash-draining enterprise that the company chose to abandon late last year.

Without those expenses, Lockheed Martin would have earned 49 cents per share - a penny more than analysts had expected.

"They're doing everything that we're expecting them to do, maybe even a little better," said Christopher Mecray, a defense analyst for Deutsche Banc in New York. "Obviously, the funkiness of the results - that big $1.5 billion loss - was because of the things that were announced last year. It's no surprise."

Lockheed Martin posted a loss for the full year of just more than $1 billion, or $2.42 per share - also attributed to the fourth-quarter charge.

Revenue for the year fell to $24 billion, down from $24.5 billion the year before.

Yet 2001 will likely be remembered not as a failure, but as a watershed year for the nation's largest defense contractor, company officials and analysts maintain.

Sales remained steady, when adjusted to account for businesses that were sold. Adjusted revenue increased 3 percent in the fourth quarter.

The corporation paid down $2.4 billion in debt during the year, and has paid down $4.4 billion since the end of 1999. It has a record backlog of contracts, exceeding $70 billion.

During 2001, Lockheed Martin built its first ship, won two mail-processing contracts with the U.S. Postal Service and deposited the Mars Odyssey spacecraft in orbit around Mars.

Its technology services business grew 4 percent, the airplane manufacturing business grew 10 percent, and the company landed what could be the most lucrative government contract ever - the F-35 Joint Strike Fighter.

The F-35 contract could be worth more than $300 billion over the next 30 years.

It, and contracts to build F-16 fighters, C-130J transport planes and other defense products, should boost sales and performance this year and beyond, company officials said.

In 2002, Lockheed Martin expects earnings of between $2.45 and $2.50 per share, and net sales of $25 billion to 25.8 billion.

Sales in 2003 are anticipated to be between $26.4 billion and $27.4 billion.

"They're still living with some vestiges of their past problems, such as their debt," said Mecray, the Deutsche Banc analyst, who rates Lockheed Martin's stock "market perform."

"But all in all, it was a pretty good quarter for them," he said.

Shares of Lockheed Martin's stock rose 59 cents to $50 on the New York Stock Exchange yesterday.

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