Boeing shares tumble on disappointing forecast

By Siri Bulusu

Boeing Co. shares took a nosedive Wednesday after the aerospace giant unsettled investors by disclosing that full-year 2016 earnings will fall well short of Wall Street expectations.

In New York Stock Exchange trading Wednesday, the Chicago company’s shares tumbled a punishing 8.7 percent, closing down $11.43 at $116.58.

Boeing’s fourth quarter profit performance actually exceeded expectations, but investors opted to focus instead on the company’s downbeat 2016 outlook.

Analysts surveyed by Yahoo had been expecting 2016 revenues to reach $97.17 billion, but Boeing officials said the company now expects 2016 revenue of $95 billion at most. And while analysts had been expecting adjusted per-share earnings of $9.43 for 2016, the company said it expects earnings in a range of $8.15 to $8.35.

In the latest quarter, revenues slumped 3.7 percent to $23.57 billion from $24.47 billion a year ago.

The new 2016 guidance “was disappointing,” Jeff Windau, a senior analyst at Edward Jones, wrote in a note to clients. “Commercial margins remained under pressure with higher spending on research and development and a sluggish cargo market,” Windau added.

In the latest quarter, Boeing reported net income of $1.03 billion, or $1.51 per diluted share, down 30 percent from $1.47 billion, or $2.02 per share in the year-ago quarter. Boeing said its “core earnings,” which exclude certain pension obligations, were $1.60, down from $2.31 a share.

Boeing’s earnings would have been 84 cents higher, except for an $884 million pretax charge the company took to account for slowing its 747-8 production rate to 0.5 planes per month, from 1.3 planes per month in August 2015.

Boeing delivered a record 762 commercial planes in 2015, and grew its backlog to 5,800 airplanes, which will satisfy eight years of production, according to Randy Tinseth, Vice President of Marketing for Boeing Commercial.

Deliveries will slow in the current, the company said: Boeing estimated a maximum 745 commercial plane deliveries in 2016, an issue Windau said could “weigh on stock performance.”

“Commercial Airplanes fourth-quarter revenue decreased slightly to $16.1 billion on lower delivery volume,” stated Boeing’s press release.

“We are closely monitoring the air cargo market as we work to win additional orders to support ongoing future production,” said Greg Smith executive vice president of Business Development & Strategy and chief financial officer in a press release.

Boeing’s full-year net income fell to $5.18 billion, or $7.44 a share, from $5.45 billion, or $7.38 a share; revenues were $96.11 billion, 6 percent up from last year’s revenue of $90.76 billion.

Photo at top: Boeing’s Chicago headquarters. The company’s stock fell after officials offered a disappointing 2016 forecast. (Siri Bulusu/MEDILL)