The New York Times-20080124-General Dynamics- Profit Rose 42- in 4th Quarter

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General Dynamics' Profit Rose 42% in 4th Quarter

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The General Dynamics Corporation, the military contractor, said Wednesday that higher sales of combat vehicles to the Army and of corporate jets pushed fourth-quarter earnings up 42 percent.

But the company's outlook for 2008 was below Wall Street's expectations.

Net income rose to $579 million, or $1.42 a share, in the quarter, from $408 million, or $1 a share, in the period a year ago. The 2006 quarterly results included a charge of 13 cents a share, largely because of the company's sale of a coal mining operation.

Analysts had expected $1.41 a share in profit, according to Thomson Financial. Earnings estimates typically exclude one-time items.

Sales rose 15 percent, to $7.52 billion from $6.51 billion last year, but fell short of Wall Street's estimate of $7.55 billion.

General Dynamics forecast a profit of $5.55 to $5.65 a share in 2008. That forecast is lower than the $5.73 a share expected by analysts.

Analysts largely shrugged off the shortfall, noting that General Dynamics often makes cautious estimates early in the year, only to raise them later.

Given the firm's history of starting the year with an element of conservatism, we remain confident in our estimate and do not believe that investors should take fright in this range, wrote Robert Stallard, an analyst with Banc of America Securities, in a research note.

Shares rose 20 cents, to $79.05.

The company's combat systems division, which makes military hardware, had a 46 percent sales increase to $2.6 billion in the quarter. The aerospace unit, composed of the Gulfstream private jet company, was up 17 percent, to $1.2 billion in sales.

For all of 2007, General Dynamics had net earnings of $2.1 billion, or $5.08 a share, up 11 percent from $1.86 billion, or $4.56 a share, in 2006.