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Rockwell Collins Corp.'s (COL) fiscal first-quarter net income fell 1.9% as strong performance by its government systems unit failed to offset weakness in commercial systems and it cut its 2009 earnings expectations.

The company cut its 2009 earnings outlook range by 15 cents a share, to $4.10 to $4.30 a share from its November estimate. It also sees revenue of $4.7 billion, compared with its earlier view for $4.9 billion to $4.95 billion.

"While market conditions for our government systems business and the air transport portion of our commercial systems business are tracking to expectations, we have seen a significant deterioration in the business aviation market," Chief Executive Clay Jones said. He added that it was difficult to predict future business conditions given the volatility in the markets.

Jones said the company was implementing a number of plans to maintain margins and "appropriately size" its business, without giving further details.

For the period ended Dec. 31, the maker of communication and electronic systems for defense and commercial use reported net income of $151 million, or 95 cents a share, down from $154 million, or 93 cents a share, a year earlier. The company bought back 1.2 million common shares during the quarter.

Revenue decreased 4.9% to $1.06 billion.

Analysts surveyed by Thomson Reuters expected earnings of 94 cents on revenue of $1.12 billion.

Rockwell Collins' commercial systems revenue fell 14% as profits declined 29% and operating margins fell to 20% from 24.2% on lower volumes. Rockwell Collins said the segment's revenue was hurt by a two-month machinists' strike at Boeing Co. (BA) and lower air-transport sales.

Government system sales grew 4.9%, earnings rose 22% and operating margin rose to 24.4% from 21%.

Last year, Jones said the company's defense business should continue to grow steadily. With ongoing global security threats, he didn't expect U.S. defense spending to decline from current levels of close to 4% of gross domestic product.

Many companies in the business-jet market have been hurt by falling demand, and analysts and investors continue to be worried about the sector, especially after Textron Inc. (TXT) reported weak numbers last week. Rockwell Collins, which supplies aircraft makers with cabin electronics and flight control, gets about 20% of its revenue from the business-jet market. The company also supplies avionics equipment to Boeing's 787 Dreamliner plane, which has repeatedly delayed its launch date.

The company said in November it would cut about 300 jobs, or 1.5% of its work force, and delay merit increases for management and most employees for three months as part of a cost-cutting plan. The company said at the time it was dealing with "significant challenges," such as air travel declines due to the weak economy.

Rockwell Collins' shares closed at $7.22 Monday and haven't traded pre-market.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com

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