What Boeing will not be able to do, however, is avoid a decidedly downward revision in company and stock performance expectations, so says Stock Analyst C. Leonard Bauer.
U.S. business: A difficult decade
Bauer, not one to wax philosophic, nevertheless takes a historian's-like view of Boeing's actions -- and the actions of numerous other companies -- in recent years.
"It's as if we decided as a nation to place all of the most idiotic, self-defeating, and economically-damaging business decisions in one decade," Bauer said. "It's as if the whole business community attended the wrong business school." The Boeing Company's (NYSE: BA) shares rose 45 cents to $42.51 in Monday afternoon trading.
Bauer cited unsustainable subprime mortgages (and their bonds), and CEOs who earn more than $50 million per year while their companies hurdle toward bankruptcy as two of the decade's most glaring examples of a management class "that's destined to rank with the nation's worst." Boeing's recent corporate decisions are likely to add to that ignominious distinction, he said. Bauer added that he does not have a rating on nor own shares in any airplane manufacturer.
Further, Boeing may ultimately end up representing the most tragic figure, Bauer says, if lower sales ensue for the commercial aviation giant.
"The Boeing case can drive you up a wall. They had no serious competition, on a product and price basis, just Airbus, which had suffered repeated delays in key programs and numerous cost overruns. And Boeing had a weak dollar against a strong euro to make its products more price-competitive. All they had to do was deliver the 787 Dreamliner on time and cost-effectively roll-out the 747-8," Bauer said. "So what happens? First contractor parts delays, then design delays for the 787, a two month machinists strike, then roll-out delays for the 747-8. They're squandering any advantage they had."
The above means Boeing will probably not first flight test the 787 Dreamliner until the second half of 2009, with a first delivery probably not before May 2010, Bauer said. The first delivery for the passenger model version of the 747-8, a competitor to Airbus' A380 superjumbo jet, now will not occur until Q2 2011, instead of late 2010, Bloomberg News reported.
So far, order delays and cancellations have not piled up, but if they do, Bauer said Boeing "will not have to look very far to identify who to blame."
Stock Analysis: Candid and frank, about warranted, judgments from Bauer. Further, in boom times, export sales delays would not be as significant; but given the U.S.'s trade picture and weak economic fundamentals, any sales delay is a cold headwind that really stings.
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Reader Comments (Page 1 of 1)
11-17-2008 @ 4:47PM
Al said...
That statement by Mr. Bauer is essentially true- "It's as if the whole business community attended the wrong business school." Too many business companies, and people have bought into the idea advanced by the Business Schools in the 1980's and 90's that leverage (debt) is the way to maximize profits. I prefer to run my business the way my father and uncle taught me. Simply put, little or no debt. Treat your employees fairly and honestly, and they will treat your customers the same. Bonuses are nice if they are applied equitably and fairly across the entire employee spectrum, and not just concentrated at the top echelon. Now it seems part of the current economic problem is that everyone has bought into the notion that debt is a fundimental cost of doing business, and that revolving debt is a way to maximize a lifestlye. I prefer the good old way of either internally financing expansion, or at very least a straight line payback of two years or less for capital equipment. I pay myself a salary, and the last person to receive a bonus is me.