- Associated Press - Tuesday, October 19, 2010

MINNEAPOLIS (AP) — Lockheed Martin Corp. said Tuesday its third-quarter profit fell more than 28 percent after it paid for buyouts for 600 executives as it shrinks because of pressure on defense spending.

Revenue for the big defense contractor rose 5.6 percent but that missed analysts’ expectations and it cut its revenue outlook for the full year.

Its shares dropped $2, or 2.9 percent, to $68.04 in morning trading Tuesday.

Defense contractors have been retrenching as the U.S. and other governments clamp down on defense spending. Britain’s plans to buy 138 of Lockheed’s F-35 Joint Strike Fighters was endangered by defense cuts expected to be announced on Tuesday.

Lockheed Martin said it has seen numerous delays on weapons decisions — and outright cancellations — over the last several months. It now expects net sales of $44.9 billion to $45.9 billion for 2010. As recently as July it had predicted revenue of $45.5 billion to $46.5 billion.

The company based in Bethesda, Md., reported net income of $571 million, or $1.57 per share, for the quarter that ended Sept. 30, down from $797 million, or $2.07 per share, a year ago.

The company spent $178 million, or 32 cents per share, on the voluntary buyout program for executives during the quarter. Lockheed Martin has cut about 10,000 jobs since the beginning of 2009, and said on Tuesday that it employs about 133,000 people.

Revenue rose to $11.38 billion from $10.8 billion a year ago.

Analysts surveyed by Thomson Reuters were expecting earnings of $1.53 per share on higher revenue of $11.59 billion.

Chief Financial Officer Bruce Tanner said in an interview that the company is getting closer to selling its Pacific Architects and Engineers business, with a deal expected to close late this year or early in 2011. He said the company is in talks with about eight potential buyers, and will narrow the list to two by mid-November.

Lockheed said earlier this month that it would sell its Enterprise Integration Group to the private equity firm Veritas Capital for $815 million in cash.

Tanner said Lockheed would be open to the right acquisition, too, but added “We don’t feel the need to acquire sales. We actually like the portfolio we have.”

The company has been plowing some of the cash it’s been generating into pensions. It made a $1.05 billion contribution during the quarter, and has contributed $1.4 billion so far this year. It ended the quarter with $2.66 billion in cash, up from $2.39 billion at the same time last year.

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