Boeing's Hard Landing (BA)
Things have been going extraordinarily well at Boeing recently. Since the ethics scandal that lead to the departure of its CEO, the company has been posting good numbers and take share from its arch-rival Airbus. Recent news that Airbus is having trouble with its super-jumbo ject could be further positive news for Boeing, which is building a super-jumbo of its own.
Boeing's achievement is highlighted by its 2005 results and the first quarter of this year's numbers. Last year, revenue rose 5% to $54.854 billion. Operating income was up 36% to $3.083 billion. The March quarter showed operating profit stronger than any of the three that predated it. With revenue of $14.204 billion, operating profit came in at $815 million.
But, the things that can trip up one company in an industry can trip up another.
Boeing said it would take charges totaling over $1 billion in the second quarter of this year. Of this $615 million will go to settle charges with the U.S. government over criminal charges for hiring a former Air Force official and taking documents on Lockheed Martin's rocket program.
The balance, however, is probably more troubling. The company may take a charge of as much as $500 million for the late delivery of surveillance planes to Australia and Turkey.
So, product delays are not just a problem at Airbus.
Bank of America now estimates that Boeing will have a loss of $.41 a share instead of an anticipated profit of $.81. That's a big swing.
Boeing's shares trade at $81.78, up from less than $50 less than two years ago, and near the 52-week high of $89.58.
In all probability, that means the stock has more room to fall than rise, and any piece of bad news could take a chunk out of Boeing's market cap.
Douglas A. McIntre can be reached at douglasamcintyre@gmail.com. He does not won shares in companies he writes about.
Boeing's achievement is highlighted by its 2005 results and the first quarter of this year's numbers. Last year, revenue rose 5% to $54.854 billion. Operating income was up 36% to $3.083 billion. The March quarter showed operating profit stronger than any of the three that predated it. With revenue of $14.204 billion, operating profit came in at $815 million.
But, the things that can trip up one company in an industry can trip up another.
Boeing said it would take charges totaling over $1 billion in the second quarter of this year. Of this $615 million will go to settle charges with the U.S. government over criminal charges for hiring a former Air Force official and taking documents on Lockheed Martin's rocket program.
The balance, however, is probably more troubling. The company may take a charge of as much as $500 million for the late delivery of surveillance planes to Australia and Turkey.
So, product delays are not just a problem at Airbus.
Bank of America now estimates that Boeing will have a loss of $.41 a share instead of an anticipated profit of $.81. That's a big swing.
Boeing's shares trade at $81.78, up from less than $50 less than two years ago, and near the 52-week high of $89.58.
In all probability, that means the stock has more room to fall than rise, and any piece of bad news could take a chunk out of Boeing's market cap.
Douglas A. McIntre can be reached at douglasamcintyre@gmail.com. He does not won shares in companies he writes about.
posted by douglas mcintyre at 2:02 PM
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