Record Earnings, Order Backlog Overshadow 787 Concerns
Despite record sales and
a years-long production backlog, Boeing has seen its stock price
drop 20 percent in New York Stock Exchange composite trading since
its original October 10
announcement the 787 Dreamliner would be delayed. It
probably comes as little consolation that Airbus is down 23 percent
in the same period, or that stock markets in general have
Boeing took what it hopes will be a big step towards rebuilding
shareholder confidence Wednesday, however, as the planemaker
reported an 84 percent increase in 2007 net income, to a record
$4.1 billion, or $5.28 per share, up from $2.2 billion, or $2.85
per share, in 2006 on higher commercial airplane deliveries, strong
growth in defense earnings, company-wide productivity improvements,
and other charges recorded in 2006.
In a conference call with investors, Boeing Chairman, President
and CEO Jim McNerney said revenue rose eight percent to a record
$66.4 billion, while the operating margin expanded to 8.8 percent
driven by double-digit margins in Boeing's commercial airplanes and
defense businesses. Fourth-quarter revenue held at $17.5 billion
while the operating margin increased to 8.7 percent driven by
margin expansion in its core businesses. Operating earnings grew 32
percent, while earnings per share increased 5 percent to $1.36 per
share, affected by a higher effective tax rate.
Boeing also raised its 2008 earnings per share projections to
between $5.70 and $5.85, due to what the planemaker says are
productivity gains realized ahead of earlier plans.
"Our 2007 results demonstrate the kind of quality financial
performance we can achieve through our simultaneous focus on growth
and productivity," said Chairman, President and Chief Executive
Officer Jim McNerney (right).
"We added substantial backlog, made major efficiency gains, and
executed well on our production and services programs. Despite some
development program challenges, we are a strong company growing
stronger, and we expect continued improvement in our financial
results in 2008 and beyond."
Some industry analysts believe the true measure of regaining
investor confidence, however, will be in the development of the
composite Dreamliner. Ahead of Wednesday's conference call, Teal
Group analyst Richard Aboulafia told Bloomberg expressions of
confidence from Scott Carson, Boeing's commercial plane unit CEO,
will no longer be enough.
"They need to come up with numbers and dates that everyone feels
comfortable with," he warned, "and McNerney needs to put his stamp
on it, as soon as possible."
In Wednesday's announcement, McNerney fell short of an iron-clad
guarantee Boeing will meet its latest projections for 787
development. "I'm more involved now," McNerney said.
"Part of my job is to get involved when help is needed and that's
been the case with the 787 over the past two months."
McNerney added Boeing will discuss the 787 production and
delivery schedule during a forthcoming conference call on its
first-quarter earnings, reports Bloomberg.