Boeing Profits Fall on Failed In-flight Internet Service

CHICAGO, Oct. 26, 2006/Satnews Daily/ — Boeing said on Wednesday its quarterly profits fell to $694 million from $1 billion in the same period last year after absorbing $280 million charges related to its pulling the plug on Connexion, Boeing’s in-flight Internet service.

But Boeing said revenue for the quarter rose 19 percent to $14.7 billion from $12.4 billion in the same period last year prompting Boeing to update its earnings per share guidance for 2006 to between $2.40 and $2.50 per share, which already reflects the termination charges for Connexion offset by better performance across Boeing's businesses.

Boeing's backlog at quarter-end also grew to a record $229 billion, up 4 percent from the end of the second quarter and 12 percent for the first nine months of 2006, reflecting strong orders for Boeing's commercial airplane products.

“Our strong performance during the third quarter and our growth outlook for 2007 underscore what Boeing can accomplish by an unwavering focus on execution and meeting our commitments,” said Boeing chairman, president and CEO Jim McNerney.

Third-quarter operating cash flow was $0.6 billion driven by strong business performance, but partially offset by a $615 million payment for the previously announced settlement with the U.S. Department of Justice. For the first nine months of 2006, operating cash flow was $5.1 billion, and free cash flow was $4.0 billion driven by strong operating and working capital performance.

Boeing said its Network & Space Systems third-quarter revenues declined to $2.9 billion due to lower volume in the Ground-based Midcourse Defense program and fewer planned milestone completions in the commercial satellite business. Earnings from operations were $228 million, compared to $712 million last year which included a $569 million gain from Rocketdyne.

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