Lockheed Martin (NYSE:LMT) today announced strong third-quarter earnings. In light of the booming business, it also increased its 2007 return on invested capital projection to 20%, and forecasts 2008 ROIC of as much as 18%.



The company reported net earnings for the quarter of $766 million, up from $629 million in the same quarter of 2006. Diluted EPS for the quarter was $1.80, well above analyst expectations of $1.64 and up from $1.46 in 2006. The performance supports the company's July updated projection that 2007 EPS will reach $6.70-$6.85.

Most impressively, each of the four business segments comprising Lockheed reported gains. Operating profits for Aeronautics was up 12.4%, primarily due to strong combat aircraft sales. Electronic Systems rose 12.3% due to missile and maritime sales. Information Systems and Global Services climbed 9.1% as the company's combat support services realized higher volume, and Space Systems finished 10% over same quarter 2006 thanks to satellite and missile systems sales.

In September, the company announced a 20% dividend increase for the second quarter of 2007, as well as increasing its buyback program by 20 million shares.

With a weak dollar, the emergence of new economies around the world interested in developing national defenses, and renewed interest in space programs, the company seems to have found the sweet spot in numerous markets. Investors seem to agree. The stock was up by 0.46% in early trading, to $107.70.

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Boeing Co. (NYSE:BA): Rival Airbus booked its first firm order for the A350 XWB. Finnair converted an order for nine of the old A350s to the new version and added two more. The first planes are booked for delivery beginning in 2014.

Continental Airlines ordered five 787-9 Dreamliners from Boeing this week, bringing its total order from the 787 line to 25 planes. Delivery of their first 787-9s is scheduled for 2009.

L-3 Communications Holdings (NYSE:LLL): L-3 Communications received a $43 million, five-year contract from the U.S. Army to develop software technology for networked warfare.

Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC): A $600 million combined project of Lockheed Martin and Northrop Grumman Corp. to build a dozen fast-response cutters was canceled last week. The project, on hold for the last year, was beset with cost overruns and had come under sharp criticism from Sen. John Kerry. The Coast Guard plans to re-bid the project.

News from the air and defense industry:

Boeing Co. (NYSE:BA) has sold five 747-8s to Volga-Dnepr, the Russian air cargo company. The freighters, priced at a total of $1.4 billion, are scheduled for delivery between 2010 and 2013. Volga also secured the option to buy five more. According to the president of V-D, this is the largest Russian private plane purchase in history.

Boeing and Eurofighter are in the second round of their dogfight as South Korea opened the second phase of its procurement program for a new combat aircraft. In 2002, Boeing had won the first round and supplied the country with forty of its F-15K planes for $5.5 billion. Now, South Korea is prepared to order twenty more planes for delivery in 2010-2012. Eurofighter believes its Typhoon model is a stronger candidate now that it has been produced and deployed in other countries. However, The Korean Times quotes military sources as saying that Boeing has the inside track because of the previous order. A decision is expected next February.