Posted on: Friday, January 30, 2004

Boeing posts 88% increase in profits

By Peter Pae
Los Angeles Times

Boeing Co., bolstered by a huge tax refund and increased demand for military equipment and services, reported sharply higher fourth-quarter earnings yesterday.

The better-than-expected results came as Boeing's new chief executive, Harry Stonecipher, said he was spending considerable time at the Pentagon and on Capitol Hill trying to restore the company's reputation since ethics scandals shook the aerospace company in the last year.

"I'm trying to deal with this perception that we're a bunch of crooks," Stonecipher said as he delivered his first earnings report since he took over the top post last month. Stonecipher, a former Boeing president, came out of retirement after CEO Philip Condit resigned abruptly Dec. 1.

"I'm telling them that if they have a problem with us, we want to know what it is," Stonecipher said. "And we're going to work on every one."

Last fall, Boeing fired chief financial officer Mike Sears and a former Air Force official, Darleen Druyun, for allegedly discussing job opportunities at the company while Druyun still was working at the Pentagon as one of its top acquisition officials.

Boeing also came under scrutiny after it admitted that an employee obtained proprietary documents from Lockheed Martin Corp. while Boeing was bidding on a lucrative rocket contract, which it eventually won.

After months of unsavory revelations, yesterday's earnings report provided a welcome relief for the company.

Fueled mainly by growth in defense contracts, Boeing's fourth-quarter net income surged 88 percent to $1.1 billion, or $1.37 a share, compared with $590 million, or 73 cents a share, in the year-earlier quarter.

After excluding a $1.1 billion pretax refund, a partial settlement with the Internal Revenue Service, Boeing posted earnings of 50 cents a share, topping analysts' estimates by 4 cents. Fourth-quarter revenue was down 4 percent to $13.2 billion from $13.6 billion.

The gains in Boeing's defense business offset a continuing slump in commercial aircraft sales. Last year, European rival Airbus sold more commercial jets than Boeing for the first time and Boeing sold 100 fewer planes than in the previous year.

Meanwhile, revenue and operating profit continued to rise at Boeing's defense unit, which for the first time accounted for most of the company's earnings.

In the fourth quarter, operating profit from defense-related businesses rose 8 percent to $603 million from $559 million as revenue rose 3 percent to $7.5 billion.