DOW JONES NEWSWIRES
Rockwell Collins Corp.'s (COL) fiscal first-quarter net income
fell 1.9% as strong performance by its government systems unit
failed to offset weakness in commercial systems and it cut its 2009
earnings expectations.
The company cut its 2009 earnings outlook range by 15 cents a
share, to $4.10 to $4.30 a share from its November estimate. It
also sees revenue of $4.7 billion, compared with its earlier view
for $4.9 billion to $4.95 billion.
"While market conditions for our government systems business and
the air transport portion of our commercial systems business are
tracking to expectations, we have seen a significant deterioration
in the business aviation market," Chief Executive Clay Jones said.
He added that it was difficult to predict future business
conditions given the volatility in the markets.
Jones said the company was implementing a number of plans to
maintain margins and "appropriately size" its business, without
giving further details.
For the period ended Dec. 31, the maker of communication and
electronic systems for defense and commercial use reported net
income of $151 million, or 95 cents a share, down from $154
million, or 93 cents a share, a year earlier. The company bought
back 1.2 million common shares during the quarter.
Revenue decreased 4.9% to $1.06 billion.
Analysts surveyed by Thomson Reuters expected earnings of 94
cents on revenue of $1.12 billion.
Rockwell Collins' commercial systems revenue fell 14% as profits
declined 29% and operating margins fell to 20% from 24.2% on lower
volumes. Rockwell Collins said the segment's revenue was hurt by a
two-month machinists' strike at Boeing Co. (BA) and lower
air-transport sales.
Government system sales grew 4.9%, earnings rose 22% and
operating margin rose to 24.4% from 21%.
Last year, Jones said the company's defense business should
continue to grow steadily. With ongoing global security threats, he
didn't expect U.S. defense spending to decline from current levels
of close to 4% of gross domestic product.
Many companies in the business-jet market have been hurt by
falling demand, and analysts and investors continue to be worried
about the sector, especially after Textron Inc. (TXT) reported weak
numbers last week. Rockwell Collins, which supplies aircraft makers
with cabin electronics and flight control, gets about 20% of its
revenue from the business-jet market. The company also supplies
avionics equipment to Boeing's 787 Dreamliner plane, which has
repeatedly delayed its launch date.
The company said in November it would cut about 300 jobs, or
1.5% of its work force, and delay merit increases for management
and most employees for three months as part of a cost-cutting plan.
The company said at the time it was dealing with "significant
challenges," such as air travel declines due to the weak
economy.
Rockwell Collins' shares closed at $7.22 Monday and haven't
traded pre-market.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com
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