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Lockheed has loss after ditching telecom plan

Lockheed Martin Corp, the largest defense contractor, had a fourth-quarter loss of US$1.51 billion, mostly because of the cost of quitting the satellite-access business.

The per-share loss was US$3.49, compared with net income of US$89 million, or US$0.21, in the year-ago period. Sales were little changed at US$7.3 billion, the company said in a statement.

Full-year profit will be US$2.45 and US$2.50 a share, topping the average estimate of US$2.39 from analysts in a Thomson Financial/First Call survey, Lockheed said.

The company said last month it would stop selling access to the Intelsat satellite network, eliminating 650 jobs in its Global Telecommunications unit, as its reduces debt accumulated during a series of acquisitions in the 1990s. Lockheed's debt-to-capital ratio, used to measure debt in proportion to capital, fell to 50.6 percent as of Dec. 31 from 54.1 percent at the end of 2000.

"I believe debt pay-down should still be a number-one priority, along with running healthy core busi-nesses," said Harry Breach, an analyst with Banc of America Securities, which rates Lockheed "strong buy." He said he doesn't own the stock.

Shares of Lockheed, based in Bethesda, Maryland, rose US$0.59 to US$50. They have gained 45 percent in the past year.

Lockheed had a pretax loss of US$194 million compared with pretax profit in the year-earlier quarter of US$370 million. The company said earnings would have risen to US$228 million, or US$0.55 a share, if the satellite-access business and the writedown of its investment in the Astrolink International LLC satellite venture were excluded.

Astrolink plans to sell telecommunications and Internet services over a satellite network.

Chief Executive Officer Vance Coffman stumbled in his satellite operations, analysts have said. Coffman created the Global Tele-communications unit in 1998 to gain customers such as Sprint Corp and AT&T Corp. Demand was less than Lockheed expected.

Lockheed had announced the plan to write down the value of its US$400 million investment in Astrolink back in November.

Astrolink has gotten about a third of the US$3.7 billion it says it needs from investors to launch the system.

The company is "dissatisfied" with the performance of its Space Systems business, which makes and launches satellites for commercial and military customers, President Robert Stevens said in a conference call with analysts and investors.

``Our commercial satellite business may require a strategic solution,'' Stevens said, without elaborating. Spokesman Jim Fetig declined to say Stevens was referring to a possible sale.

"He did not specify any specific solution," Fetig said.

"The word `strategic' has a wide range of meanings." Sales at Lockheed's Space Systems business, which includes its satellite business, fell 13 percent because of a decline in launches for commercial satellites. The business lost US$9 million in the quarter, versus profit of US$94 million in the year-ago period.

Profit at the company's Aeronautics business, which makes military aircraft, rose 34 percent to US$131 million because of more work in the F16 and F22 fighter-jet programs. Sales in the unit rose 28 percent to US$1.99 billion, helped by more deliveries of C-130J military transport planes.

The company beat Boeing Co. in October for the contract to build the Joint Strike Fighter, which has a potential value of US$200 billion. The program, known now as F35, calls for 3,000 aircraft to be built for the US Air Force, Navy and Marine Corps, and the UK's Royal Navy. It is the costliest military aircraft program in history.
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