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Shortfall at General Dynamics

Revenue misses Wall Street's target, but earnings are better than expected.

General Dynamics

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said revenue for the third quarter climbed 14.5% as sales grew across all of its segments, but the top line still fell short of Wall Street's consensus target.

The defense contractor had sales of $6.1 billion, up from $5.3 billion a year ago. General Dynamics said sales and operating earnings grew in each of its divisions -- information systems and technology, combat systems, marine systems and aerospace.

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Earnings from continuing operations increased to $440 million, or $1.08 a share, from $364 million, or 90 cents a share, a year ago. Net earnings, including discontinued operations, were $438 million, or $1.08 a share, in the most recent quarter.

On average, analysts surveyed by Thomson Financial were expecting a profit of $1.06 a share and revenue of $6.29 billion.

"General Dynamics has delivered another strong performance in the third quarter of 2006," said Nicholas Chabraja, the company's chairman and chief executive. "Revenues and operating earnings increased significantly over the third quarter of 2005, and year-to-date cash generation continues to meet our expectations.

At the end of the third quarter, General Dynamics had a funded backlog of $31.7 billion. Total backlog was $44.4 billion.