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Saturday, September 02, 2006

Weekend Edition: Fly Me To The Moon And Let Me Play Among The Stars

Stocks: (BA)(LMT)(NOC)

Lockheed Martin got the $3.9 billion contract to build the next US space craft. Northrop and Boeing did not.

The news adds to a list of disappointments for Boeing that seems to grow each week. The company recently ran into technical problems with a series of global positioning satellites it is building. The company recently announced a $3 billion share buyback, but it has not done much for the price. The Wall Street Journal reported earlier in the month that the Air Force was reviewing a $412 million aircraft contract.

In late July, Boeing announced poor earnings for the last quarter. The company lost $160 million primarily for penalties for contract delays and settlement of a contract dispute with the government that lead to a $600 million settlement with the Justice Department. In mid-July, Boeing also admitted that its new 787 was overweight and had supplier problems.

Boeing was on something of a roll, and the loss of the chance to build the cornerstone of the new space program is another setback. Boeing’s stock hit almost $90 in early May. It is now below $75, and there seems to be little reason for it to move up.

Just a few months ago, it looked like Boeing had Airbus on the ropes because of production problems with the European aircraft company’s super jumbo jet. But, Boeing was experiencing problems with its new plane as well.

Boeing’s losing streak will not go on forever, but its is going to have to demonstrate that it can get out of a rut or investors will continue to turn away.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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