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Boeing Cuts '08 Sales Outlook

For 2007, it boosts its forecast.
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Updated from 9:14 a.m. EDT

Boeing

(BA) - Get Report

said its third-quarter net income soared 61%, but the company reduced segments of its 2008 guidance to allow for delays in the delivery of its new 787 aircraft.

The aircraft maker reaffirmed its overall earnings guidance of $5.55 to $5.75 a share for 2008, saying strong productivity would offset the impact of delays and increased research and development spending. Analysts had estimated $6.04. Boeing recently pushed back the first 787 flight by six months, to November or December of 2008.

Also for next year, Boeing reduced its revenue guidance to between $67.5 billion and $68.5 billion, down from between $71 billion and $72 billion. Analysts were looking for $71.2 billion.

The company boosted its R&D spending estimate to between $3.2 billion and $3.4 billion, up from $2.8 billion to $3 billion, and it cut the number of projected airplane deliveries to between 480 and 490, down from 515 to 520.

On a conference call, CEO Jim McNerney said the new 787 delivery schedule reflects "an aggressive plan with normal margins in it." Previously, margins had been slashed. Now Boeing will move 35 deliveries to 2009 from 2008. It will still deliver 109 airplanes by the end of 2009, just three fewer than originally scheduled. Only a handful of deliveries will occur next year.

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Revenue guidance for 2008 was lowered because $1 billion moves to 2007, reflecting "much better order traffic," and $2.5 billion is deferred due to the 787 delays, said CFO James Bell.

McNerney said the 787 postponement indicated that "we needed to work with

suppliers to make sure we had better visibility on the build and the components that were coming in."

In response, Boeing has placed more employees with manufacturing and supply chain expertise at supplier facilities. Additionally, McNerney noted, the program has a new general manager and the schedule was revised.

For the third quarter, Boeing reported net income of $1.1 billion, or $1.44 a share. Analysts had estimated $1.24. Revenue was $16.5 billion, up 12% and was around $500 million better than expected.

In the commercial airplanes division, operating earnings were $945 million, up 46%. Revenue was $8.3 billion, up 23%, as deliveries rose 9% to 109 aircraft. The backlog is $224 billion. The company's total backlog is $295 billion, up 29% during the past 12 months.

The integrated defense systems unit had earnings of $824 million, down 6%, reflecting a $94 million charge for Delta II inventories and Boeing's share of United Launch Alliance losses. Revenue was $8 billion, up 3%.

For the full year 2007, Boeing increased its guidance for revenue, earnings per share and cash flow due to its core business performance and lower corporate costs. Earnings are now expected to be between $5.05 and $5.15 a share, up from $4.80 to $4.95. Analysts had estimated $5.06. R&D spending will remain at $3.7 billion.

Shares of Boeing were down 69 cents at $94.26. The stock has declined about 11% this month.