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. Last Updated: 07/27/2016

Lockheed Warns of Lower Earnings




BETHESDA, Maryland -- A disappointing year for Lockheed Martin Corp. has grown even darker as the aerospace giant warned investors that earnings will be lower than expected for the fourth quarter, the year and even 1999.


The company's stock dropped like a lump of coal Wednesday on the news, closing down $10.50, or 11 percents, at a 52-week low of $84.50 on the New York Stock Exchange.


"They've had a lot of problems, and this is a crowning blow at the end of the year,'' said financial analyst Paul Nisbet of JSA Research Inc.


Expectations were already down because of a similar warning the company issued last month, but the situation is even worse because of lagging commercial space business and delays in rocket launches and deliveries of C-130J military transport planes.


To top it off, acting U.S. Air Force Secretary F. Whitten Peters told reporters Wednesday that he does not intend to rescue the company's production plant in Marietta, Georgia, by purchasing C-130Js sooner than planned.


Lockheed Martin officials put as positive a face on the day's financial announcements as they could manage, but said they were trying to adjust the expectations of analysts and investors to a realistic level.


"While it is very disappointing to all of us ... I don't think we're without opportunity to move forward,'' Marcus Bennett, chief financial officer, told Wall Street analysts in a conference call.


The company said its fourth-quarter earnings per diluted share - to be reported the week of Jan. 25 - are likely to be 10 percent below the $1.79 logged for the fourth quarter of 1997.


Analysts had expected the company to earn $2.06 a share in the quarter.


For the year, earnings per share excluding one-time charges or gains are expected to be up 2 percent to 4 percent - far from the low double-digit growth Lockheed Martin forecast going into 1998.


Company executives said investments this year in the areas of telecommunications, space launches, information technology and postal automation will boost the bottom line in 1999.


"We fully anticipate these investments to generate significant sales and earnings growth in the future, with commensurate growth in shareholder value,'' said Vance Coffman, chairman and chief executive officer.


The news closes an unusually grim period for the world's biggest defense contractor and nation's second-biggest aerospace company.


Early this year, federal antitrust regulators unexpectedly torpedoed Lockheed Martin's attempt to purchase Northrop Grumman Corp., and the company lost a major missile defense contract to rival Boeing Co. around the same time that its troubled Army missile program suffered a high-profile test failure.


An $8 billion sale of F-16s to the United Arab Emirates was supposed to close during the fourth quarter but has wandered into next year, and the U.S. Air Force has postponed Titan rocket launches as it investigates a booster explosion.