DOW JONES NEWSWIRES
L-3 Communications Holding Inc.'s (LLL) first-quarter profit
fell 7.7% but it raised its outlook for earnings this year because
of more planned stock buybacks and expected margin improvement.
The company, which has contracts for such services as training
foreign militaries and upgrading government aircraft, boosted its
earnings view for 2011 to $8.50 to $8.60 a share, from the $8.40 to
$8.55 projected in January. It lowered its revenue projection,
though: it now sees revenue of $15.5 billion to $15.6 billion, down
from $15.7 billion to $15.9 billion.
The improved bottom-line forecast is partly the result of more
planned share repurchases and higher estimated operating margins,
thanks to tight cost controls and favorable projected sales mix.
The company said it expects government-services revenue will be
weaker than originally thought.
L-3 differs from larger rivals who rely on a few major contracts
for the bulk of revenue. Its core earnings have held up in recent
quarters as defense companies prepare for slowing spending by
customers such as the U.S. military.
For the quarter ended March 26, L-3 posted a profit of $204
million, or $1.85 a share, down from $221 million, or $1.87 a
share, a year earlier. Net sales eased 0.6% to $3.6 billion. In
January, it had forecast earnings of about $1.85 a share on $3.6
billion in revenue, which was weaker than the average analyst
estimates at the time.
Operating margin narrowed to 10.8% from 11.3%.
Funded orders dropped 7.7% from a year earlier to $3.36 billion
as funded backlog ended the period at $10.91 billion, down
1.6%.
The electronic-systems segment, L-3's biggest by revenue, saw
sales fall 1.2% as operating income decreased 6.2%.
Shares were down 0.3% at $76.75 in light, premarket trading.
Through Wednesday's close, the stock had declined 21% in the last
year, while the wider market has climbed.
-By Joan E. Solsman and Ian Thomson, Dow Jones Newswires;
212-416-2291; ian.thomson@dowjones.com