DOW JONES NEWSWIRES
L-3 Communications Holdings Inc.'s (LLL) third-quarter profit dropped 4.4% following a year-earlier gain as sales dipped but margins rose.
The company cut its sales forecast for the year to $15.6 billion to $15.7 billion from $16 billion to $16.1 billion but affirmed its earnings view as it sees higher margins than before.
For 2011, it predicted earnings of $8.20 to $8.40 on sales of $15.7 billion to $15.9 billion. Analysts most recently expected $8.83 a share and $16.43 billion, respectively.
The contractor of services such as training militaries and upgrading government aircraft differs from larger rivals who rely on a few major contracts for a bulk of sales. Its bottom line has held up in recent quarters, as defense companies prepare for slowing spending by customers such as the U.S. military.
L-3 posted a profit of $238 million, or $2.07 a share, down from $250 million, or $2.12 a share, a year earlier. The latest quarter included a 3-cent debt retirement charge while the year-earlier result saw a 22-cent tax-related benefit. Sales dipped 0.2% to $3.84 billion.
In July, the company forecast earnings of $2 a share on $4 billion in sales, falling short of analysts' then-estimates.
Operating margin widened to 11.4% from 10.9%.
Funded orders rose 4% from a year earlier to $3.5 billion as funded backlog ended the period at $10.8 billion, down from $10.9 billion at the beginning of the year.
The electronic systems segment, typically L-3's largest by sales, fell 2.6% on that basis as operating income jumped 20% on higher margins.
Shares closed Wednesday at $71.13 and were inactive premarket. The stock has dropped 18% this year.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; firstname.lastname@example.org