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April 24, 2013

News Briefs April 24, 2013

Army warns of steeper reductions in troop numbers

Senior U.S. Army officials warned April 23 they may have to cut more than 100,000 additional soldiers over the next decade unless automatic spending reductions forcing the military services to slash their budgets are stopped.

Gen. Ray Odierno, the Army’s chief of staff, told the Senate Armed Services Committee that the budget cuts could threaten readiness levels on the Korean peninsula, where military forces remain on high alert after North Korea threatened to attack the United States and South Korea. The cuts have forced the cancellation of a series of training exercises intended to help prepare soldiers for possible combat there, he said.

Testifying before the committee, Army Secretary John McHugh said the losses would undermine the service’s ability to be prepared for wartime missions. ìToday we find our Army at a dangerous crossroads,î McHugh said.

The Army has already planned to trim its ranks from a wartime footing of 570,000 soldiers to 490,000 due to previously planned budget reductions approved by Congress in 2011, according to McHugh said. But if the automatic cuts, known as sequestration, are extended into future years, tens of thousands more soldiers, including members of the Army National Guard and Reserve, will have to be let go due to a lack of money, he said.

Odierno also said the cut of 100,000 additional troops is a minimum number if sequestration is allowed to continue.

The cuts are simply too steep, he said. AP

Lockheed Martin first quarter profit rises, warns on sales

Lockheed Martin said April 23 its first-quarter net income rose 14 percent, beating Wall Street predictions, but warned that its results for the rest of the year could take a hit as a result of federal budget cuts.

The Bethesda, Md.-based aerospace and defense contractor said the cuts, known as sequestration, could reduce its 2013 sales by about $825 million. As a result, the company said it now expects its sales for the year to come in near the low end of its previously projected range.

For the three months ended March 31, Lockheed Martin earned $761 million, or $2.33 per share, up from $668 million, or $2.03 per share, in the 2012 first quarter. Excluding one-time items, the company said its adjusted profit was $2.48 per share for the recent quarter.

Revenue slipped 2 percent to $11.07 billion from $11.29 billion.

Analysts, on average, expected a profit of $2.04 per share on $10.31 billion in revenue, according to Thomson Reuters.

Lockheed said sales rose 13 percent to $1.99 billion at its missiles and fire control business due to higher demand from tactical missile programs, while space systems sales increased 4 percent to $1.96 billion, helped by the timing of orders from strategic and defensive missile programs, along with higher demand from government satellite programs.

But those gains were offset by a 14 percent drop in sales at the company’s aeronautics business to $3.19 billion, mainly as a result of lower demand for F-16 aircraft.

The company backed its 2013 profit prediction of between $8.80 and $9.10 per share, but said it expects its sales total to come in at the low end of its previous range of $44.5 billion to $46 billion.

Analysts were forecasting earnings of $8.92 per share on $45.12 billion in revenue. AP

Boeing slows 747 production on weak demand

Boeing says it will slow down production of its superjumbo 747-8 because of weak demand.

Boeing builds two of the planes every month. It’s slowing that rate to one and three-quarters per month.

Boeing had warned that a slowdown was possible if demand didn’t improve. Boeing has orders for 64 of the planes still to be built, including freighter and passenger versions.

Boeing first delivered the revamped 747-8 in 2011. The freighter version received the most orders. But the size of the passenger version is midway between the larger Airbus A380, which has been on the market longer, and the smaller Boeing 777, which is popular with airlines. That has left little room for the 747-8.

Boeing says the slower pace of production won’t have a significant financial impact. AP

Sweden reaffirms its commitment to Afghanistan

Swedenís foreign minister says his country will maintain its long-standing support for Afghanistan by keeping about 200 soldiers in the country after most foreign troops turn over combat responsibilities to Afghan forces next year.

Carl Bildt said in Kabul that April 24 Swedenís commitment remains and will be even stronger in the years ahead.

Bildt spoke during a news conference with Afghan Deputy Foreign Minister Jawed Ludin.

Repeating a pledge he has made before, Bildt says Swedish soldiers remaining in Afghanistan will support and train the countryís security forces.
He says they probably will operate in northern provinces where Swedenís more than 400 soldiers currently are deployed.

But Bildt says he is still discussing with Afghan officials about what exact role the Swedish troops will play. AP

Confederate flags fly again at VA hospital in S.D.

Confederate flags are flying again at a southwestern South Dakota veterans hospital, upsetting two patients who first complained about the flags and then say officials allowed them to complete a hospital program early.

The two flags were removed from historical displays at the Veterans Affairs Medical Center in Hot Springs last week after some patients said they were symbolic of racism. The flags were returned to the displays April 23 as a reflection of those who gave the ultimate sacrifice for America,î VA Black Hills Health System Director Steve DiStasio told the Rapid City Journal.

The original purpose of the VAís Hot Springs facility was for the care of Civil War veterans,î he said. ìOut of respect for all of our nationís veterans, from every battle in history, we will maintain the historic Freedom Shrine (display) in its entirety.

Craig DeMouchette, a veteran of Desert Storm in Iraq, said he understands the historical value of the flags but still objects to their display.

These flags belong in a museum, not an active government building that treats veterans, some of them African-American, he said.

DeMouchette, of Denver, and fellow veteran Kameron Mitchell, of Lincoln, Neb., said that a few days after they raised the flag issue, they were told by VA officials that they could leave their treatment program for post-traumatic stress disorder more than two weeks early, with full credit.

They contend the offer was intended to get rid of them and defuse the flag controversy. VA officials declined to respond to that assertion.

VA Black Hills Health System spokeswoman Jill Broecher said officials canít discuss individual veterans or their treatment.

Our first priority is always to maintain the privacy of our veterans, she said.

DeMouchette said he has contacted a member of Coloradoís congressional delegation for help in once again getting the flags removed. AP

Israeli Aerospace reaches deal with Lockheed to make wings for F-35

Israel Aerospace Industries says it has signed a long-term contract with U.S. defense giant Lockheed Martin to produce wings for the F-35 next-generation fighter jet.

The state-owned company said April 23 the contract is for 10 to 15 years and could generate up to $2.5 billion in sales. It says the wings will be made at an Israeli facility that already produces wings for Lockheedís F-16 warplane.

The F-35 is the Pentagonís most expensive weapons program, with an estimated cost of nearly $400 billion. The program aims to replace a wide range of existing aircraft for the U.S. and several partner countries.

The program has suffered repeated delays. The Pentagon briefly grounded its small fleet of F-35s in February after discovering a small crack in an engine turbine blade. AP

Northrop posts 3 percent drop in first quarter demand, but beats predictions

Defense contractor Northrop Grummanís first-quarter net income fell 3 percent as government defense spending cuts reduced sales at some of its businesses.

The company, based in Falls Church, Va., said April 24 that it earned $489 million, or $2.03 per share, down from $506 million, or $1.96 per share, in the same quarter the year before. The recent quarterís results are based on 241 million outstanding shares, while last years are based on 258 million.

Excluding one-time items, the company posted an adjusted profit of $1.94 per share for the recent quarter.

Revenue edged down 1.5 percent to $6.1 billion from $6.2 billion.

Despite the drops, the results beat Wall Street predictions. Analysts, on average, expected a profit of $1.73 per share on $5.95 billion in revenue, according to FactSet.

Aerospace sales increased 4 percent to $2.49 billion on higher demand for both manned and unmanned aircraft. But information systems revenue dropped 9 percent to $1.67 billion as a result of program completions and lower funding levels, while technical services revenue fell 4 percent to $717 million on lower demand from certain product programs.

For 2013, Northrop Grumman said it still expects to earn between $6.85 and $7.15 per share on revenue of about $24 billion. Analysts expect earnings of $6.99 per share on $23.93 billion in revenue. AP

General Dynamics posts about 1 percent increase in first quarter net income on lower costs

General Dynamics Corp. said April 24 its first-quarter net income edged up about 1 percent, as lower operating costs offset a slight decrease in revenue.

The aerospace and defense company earned $571 million, or $1.62 per share, up $564 million, or $1.57 per share, from the same quarter the year before. A reduction in the number of outstanding shares from last year provided a 3-cent boost to the recent quarterís per-share results.

Revenue fell 2 percent to $7.4 billion from $7.58 billion.

The profit easily beat Wall Street predictions, while the revenue fell short. Analysts, on average, expected a profit of $1.50 per share on $7.54 billion in revenue, according to FactSet.

General Dynamics CEO Phebe Novakovic called the quarterís results a ìstrong startî to achieving the companyís goals for the year, saying they reflect its continued focus on operations, cost improvement and cash generation.

Combat systems revenue tumbled 19 percent to $1.55 billion, but was partially offset by a 10 percent increase in aerospace revenue to $1.78 billion. Operating costs and expenses fell 2 percent to $6.58 billion. AP




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