Lockheed Martin Corp., the world's largest defense contractor, reported a quarterly loss yesterday as telecommunications and commercial satellite investments dragged down earnings even as the defense buildup continued to boost revenue.
For the quarter that ended in December, Bethesda-based Lockheed reported a loss of $347 million (77 cents a share). That was an improvement from the year-ago period when it reported a loss of $1.5 billion ($3.49), which was related to the discontinuation of its telecommunications business.
Revenue was up 6 percent, to $7.78 billion, from $7.33 billion, largely due to growth of its technology services business, which includes information technology and the training of baggage screeners that it provided under a Transportation Security Administration contract.
For the year, Lockheed reported a profit of $500 million ($1.13). Revenue grew 11 percent, to $26.58 billion, from $23.99 billion, as work on the F/A-22 fighter jets, which is to become operational in December 2005, ramped up.
"Our fourth quarter, like the entire year, was a solid one for the corporation. Our performance delivered higher sales, operating profit and cash," said Vance D. Coffman, chairman and chief executive.
Lockheed's investment in several telecommunications ventures, including satellite companies Intelsat Ltd. and Inmarsat Ltd., continued to deteriorate, and the firm took a $504 million charge, according to a company statement. Lockheed also took a $106 million charge for its investment in Space Imaging LLC, a satellite imaging firm.
Further dragging down earnings was a $112 million charge related to payments the firm made to a Russian manufacturer for commercial satellite launches that never materialized.
The company is also dealing with an underfunded pension plan, a problem nagging many companies during the stock market slump. Lockheed made a cash contribution of $87 million to its pension accounts in 2002 and forecasts an $160 million contribution this year, company officials said.
"There were a lot of special items, nonrecurring items, but their growth and top-line sales are very good and getting better," said Paul Nisbet, a defense analyst for JSA Research. "It's just these cleaning up of old problems that is tearing down their earnings as well as the pension income problems, and that could go away if the market goes in the other direction."
Meanwhile, rival Raytheon Co., based in Lexington, Mass., reported a fourth-quarter loss of $15 million (4 cents), an improvement from the $162 million (42 cents) loss it reported for the same period last year. Revenue increased 6 percent, to $4.66 billion, from $4.39 billion.
For the year, the maker of Tomahawk and Patriot missiles reported a loss of $587 million ($1.44) on $16.76 billion in revenue.
Raytheon's business-jet unit, which is the focus of a Securities and Exchange Commission inquiry, reported revenue of $687 million for the fourth quarter, down from $718 million in the year-ago period. There will be 600 layoffs in the unit this year, the company announced. There has been declining demand for corporate jets as the economy slumps and corporations tighten their budgets.