The results come as Lockheed, which makes fighter jets and other military hardware, and the rest of the defense industry continue to digest the effects of a broad shift in spending priorities at the Pentagon, their biggest customer.
The Bethesda, Md.-based maker of fighter jets earned $734 million, or $1.88 per share. It made $882 million, or $2.15 per share last year. Revenue rose about 2 percent to $11.24 billion.
For Lockheed, that would mean capping production of its F-22s-- which costs $140 million each--at 187 jets. The company has said it accepts that decision, but the Obama administration and Congress are in a fierce battle over attempts by lawmakers to add hundreds of millions more dollars to the budget for additional planes.
The budget could also help Lockheed, as the Pentagon plans to accelerate production of the company's newer F-35 fighter. The military eventually expects to buy 2,450 of the jets, with foreign governments considering purchases of another several hundred.
Bruce Tanner, Lockheed's chief financial officer, said in an interview that the company has not lobbied for more F-22s since Defense Secretary Robert Gates made his budget announcement in April.
"We would love to build more F-22s, but the customer needs to decide whether that is what they want to do or not," Tanner said.
Lockheed has warned that losing the F-22 would lead to thousands of job losses when the production line ends at its Marietta, Ga. plant in 2012 under current plan. Tanner said funding for additional jets could prompt the company to add jobs.
Some of Obama's budget proposals have already been felt. The cancellation of Lockheed's contract to build new helicopters to carry the president and a communications satellite have taken $2.5 billion out of the company's $79 billion backlog of orders, Tanner said.
The company's aerospace unit, which makes the F-22 along with other fighters and cargo planes, had seen its sales dip in recent quarters as it shifts from making the aging F-16 to the F-35. But the division posted a seven percent sales increase in the second quarter, driven by higher results in both the F-35 and the F-16, which Lockheed still sells to foreign governments.
Sales were lower in its business selling services to government agencies, which Tanner said was the result of problems on some programs and protests by competitors that delayed sales on contracts for special forces and at a government nuclear facility. The division's sales were down 6 percent to $3 billion.
Lockheed's space division, which makes satellites and other equipment, saw sales drop 7 percent to $2 billion while its military electronics unit sales dipped 1 percent to $3 billion.
In the second quarter, the pension expense was $115 million. That lowered earnings by $75 million, or 19 cents per share this period while one-time gains from land sales and tax gains a year ago added 19 cents. The company said in January that pension expenses would be higher each quarter this year because of a drop in the retiree fund's value.
The results still beat analyst expectations of $1.81 per share and revenue of $11.14 billion.
Lockheed held to its 2009 earnings outlook of between $7.15 and $7.35 per share on revenue between $44.7 billion and $45.7 billion. Analysts are looking for stronger results of $7.41 per share on $45.36 billion in revenue.
Its shares tumbled $4.67, or 5.7 percent, to $77.44 in morning trading.
Under President Barack Obama's 2010 budget, the military is spending more on weapons to fight insurgencies in places like Iraq and less on weapons designed for conventional wars.For Lockheed, that would mean capping production of its F-22s-- which costs $140 million each--at 187 jets. The company has said it accepts that decision, but the Obama administration and Congress are in a fierce battle over attempts by lawmakers to add hundreds of millions more dollars to the budget for additional planes.
The budget could also help Lockheed, as the Pentagon plans to accelerate production of the company's newer F-35 fighter. The military eventually expects to buy 2,450 of the jets, with foreign governments considering purchases of another several hundred.
Bruce Tanner, Lockheed's chief financial officer, said in an interview that the company has not lobbied for more F-22s since Defense Secretary Robert Gates made his budget announcement in April.
"We would love to build more F-22s, but the customer needs to decide whether that is what they want to do or not," Tanner said.
Lockheed has warned that losing the F-22 would lead to thousands of job losses when the production line ends at its Marietta, Ga. plant in 2012 under current plan. Tanner said funding for additional jets could prompt the company to add jobs.
Some of Obama's budget proposals have already been felt. The cancellation of Lockheed's contract to build new helicopters to carry the president and a communications satellite have taken $2.5 billion out of the company's $79 billion backlog of orders, Tanner said.
The company's aerospace unit, which makes the F-22 along with other fighters and cargo planes, had seen its sales dip in recent quarters as it shifts from making the aging F-16 to the F-35. But the division posted a seven percent sales increase in the second quarter, driven by higher results in both the F-35 and the F-16, which Lockheed still sells to foreign governments.
Sales were lower in its business selling services to government agencies, which Tanner said was the result of problems on some programs and protests by competitors that delayed sales on contracts for special forces and at a government nuclear facility. The division's sales were down 6 percent to $3 billion.
Lockheed's space division, which makes satellites and other equipment, saw sales drop 7 percent to $2 billion while its military electronics unit sales dipped 1 percent to $3 billion.
Disclosure I am long LMT shares in my industrial goods folio.
Defense stocks still look great.
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