DEFENSE BOOSTS NORTHROP'S BOTTOM LINE.

Byline: Staff and Wire Services

Costs associated with stopping 717 jetliner production in Long Beach contributed to an 84 percent fourth-quarter profit slump at Boeing Co. while rival Northrop Grumman Corp.'s income rose 31 percent thanks in part to strong military spending.

Despite the profit plunge, Boeing executives forecasted a big jump in commercial airplane deliveries next year, reflecting a resurgent market and its own improved prospects against Airbus.

Write-offs of a controversial lost Pentagon contract for air tankers also helped drive net income down to $186 million from $1.13 billion a year earlier, when a billion-dollar tax refund inflated results, the Chicago- based company said.

Boeing also lost money from its commercial airplane business in the quarter on lower sales and plane deliveries.

But analysts and investors cheered the company's outlook for a long- awaited upturn in the airplane market and the estimate it will deliver between 375 and 385 airplanes in 2006 - up as much as 20 percent from this year's projected 320.

Boeing CEO Harry Stonecipher said the improved outlook for airplanes can be attributed largely to increased demand for Boeing's 737s and 777s, with the 787 also drumming up more interest.

Boeing shares, which rose 23 percent last year, increased $1.19, or 2.3 percent, to close at $52.23 on the New York Stock Exchange.

Analyst Richard Aboulafia of the Fairfax, Va.-based Teal Group, was skeptical, though.

``The notion that all these ailing airlines are going to order 800 jets in '06 is unbelievable,'' he said.

But he noted that that Boeing has endured two years of turmoil and turnover yet remained in top financial shape.

Net earnings for Boeing's October-through-December period equaled 23 cents per share, down from $1.40 per share a year earlier. Analysts surveyed by First Call had estimated earnings at 5 cents per share.

Revenues increased 1 percent to $13.3 billion from $13.2 billion.

The company estimated 2005 earnings at between $2.40 per share and $2.60 per share, in line with analysts' expectations of $2.54 per share. Its forecast of $58 billion was slightly above the Wall Street estimate of $57.8 billion.

For the full year, net income was $1.87 billion, or $2.30 per share. That more than doubled the net earnings of $718 million, or 89 cents per share, in 2003. Revenue climbed 4 percent to $52.5 billion from $50.3 billion.

Meanwhile, Northrop Grumman Corp., whose products include warships, the B-2 stealth bomber and the Global Hawk unmanned reconnaissance plane, said net income rose to $294 million, or 80 cents a share, during the quarter ended Dec. 31, from $224 million, or 61 cents a share, a year earlier.

Income from continuing operations in the quarter was 81 cents a share, matching the average forecast of analysts surveyed by Thomson First Call.

Revenue increased 10 percent to $7.85 billion, from $7.15 billion a year ago.

Sales were helped by strength in electronic systems and ships. The latest sales figure topped analysts' average estimate of $7.56 billion.

Chief Executive Officer Ronald Sugar said the company is well-positioned in the next two years despite pending federal budget cuts.

The company - as well as Lockheed Martin Corp. and Boeing - could take a hit if the government goes through with proposed cuts in U.S. defense spending this year.

This year, Northrop Grumman expects sales to grow to between $31 billion and $31.5 billion, increase earnings per share from continuing operations to between $3.45 and $3.60.

Analysts have been forecasting 2005 profit of $3.53 per share on sales of $31.57 billion.

For the full year, Northrop Grumman earned $1.11 billion, or $3.03 a share, compared with $866 million, or $2.32 a share, in 2003. Revenue for 2004 increased to $29.9 billion compared with $26.4 billion in 2003.

Shares of Northrop Grumman rose 34 cents to close at $52.34 in Wednesday trading on the New York Stock Exchange. Its shares have traded in a range of $47.80 to $58.15.

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Costs associated with stopping production of 717 jetliners, such as these in this 1998 photo of the Long Beach production plant, contributed to a profit slump at Boeing Co.

File Photo