L-3 2Q Profit Up 1.3% As Sales Slightly Higher; View Reduced

   DOW JONES NEWSWIRES 
 

L-3 Communications Holdings Inc.'s (LLL) second-quarter profit rose 1.3% as revenue increased less than the company expected.

L-3 also lowered its 2010 earnings forecast by 8 cents to $8.05 to $8.25 a share, after raising the view in April. The company also cut its revenue target by $100 million, to a range of $16 billion to $16.1 billion.

The contractor of services such as training foreign militaries and upgrading government aircraft differs from larger rivals who rely on a few major contracts for a bulk of revenue. Executives have said that diversity will help it as U.S. defense spending growth slows. Moody's Investors Service upgraded L-3 to investment grade in May, citing debt reduction and sustained operating performance.

L-3 posted a profit of $227 million, or $1.95 a share, up from $223 million, or $1.90 a share, a year earlier. Excluding a debt-retirement charge and incremental interest expense, earnings were $2.04 in the latest quarter, and revenue rose 1% to $3.97 billion.

In April the company forecast earnings of $1.90 on $4 billion in revenue, trailing analysts' then-estimates.

Operating margin was unchanged at 10.6%.

Funded orders rose 22% to $4.1 billion as funded backlog ended the period at $11.1 billion, up 1.8% during the quarter.

The electronic systems segment, typically L-3's largest by revenue, saw sales drop 2.4%, though profit increased on margin growth. Government services sales declined 4.4% as the segment's earnings dropped 16%.

Shares closed Monday at $76.65 and were inactive premarket.

-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; [e-mail]