updated 1/25/2007 9:14:02 AM ET 2007-01-25T14:14:02

Defense contractor Lockheed Martin Corp. said Thursday that fourth quarter earnings rise 28 percent on growth across its military hardware and other divisions, prompting the company to raise its profit outlook for 2007.

Net income climbed to $729 million, or $1.68 per share, for the three months ended Dec. 31 compared with $568 million, or $1.29 per share, in the year-ago period. Analysts polled by Thomson Financial were looking for a profit of $1.46 per share.

Revenue was up 6 percent to $10.84 billion from $10.23 billion in the previous year on improved sales in most of its business segments. Analysts were looking for sales of $10.77 billion.

Lockheed, which makes fighter jets, missiles and is expanding into government information technology, saw revenue growth in most of its five business areas.

“We continue to have consistent performance,” Christopher Kubasik, Lockheed’s chief financial officer, said in an interview.

The company’s systems and IT unit posted $5.7 billion in sales, up 7 percent. The space systems unit, which makes satellites and other space equipment, saw revenue climb 8 percent to $2 billion.

Lockheed’s core aeronautics unit, which builds planes such as the F-22 and F-35 fighter jets, along with the C130J cargo plane, also posted a 3 percent increase to $3.1 billion after dipping in past quarters. The company has said sales are expected to be lower in the next few years as its big F-16 program phases down as is replaced by the new fighters.

The improved aeronautics results led Lockheed to raise its outlook for this year by 20 cents to between $5.80 and $6 per share. Analysts forecast full-year earnings of $5.87 per share. Kubasik attributed about half of the company’s 20 cent increase to improved performance in the aeronautics unit.

But Lockheed lowered its sales outlook to between $40.25 billion and $41.25 billion, down from its previous forecast of $41 billion to $42 billion. Analysts expect 2007 revenue of $41.6 billion.

Kubasik said the lowered sales forecast was due to the company’s newly completed joint venture with rival Boeing Co. to provide government rocket launch services. Lockheed will have a 50 percent stake in the venture, called United Launch Alliance, but Lockheed’s 2007 sales will be cut by about $800 million as launches of its Atlas rockets are transferred to ULA.

“I don’t think this will be a surprise,” Kubasik said of the lowered outlook.

For all of 2006, Lockheed earned $2.5 billion, or $5.80 per share on revenue of $39.6 billion. In 2005, the company earned $1.8 billion, or $4.10 per share, on $37.2 billion in revenue.

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