Northrop posts 4th-quarter loss on $3.06B charge

Northrop Grumman Corp. posted its first quarterly loss in seven years as it wrote off the declining value of businesses it acquired several years ago.

But sales of weapons and military electronics increased and helped the Century City company jump over its rival Boeing Co. to become the nation’s second-largest military contractor. Bethesda, Md.-based Lockheed Martin Corp. is No. 1.

Northrop also surged ahead of Boeing as one of the largest private employers in Southern California, with more than 27,000 employees.

Boeing, which once had more than 36,000 employees in the region, has seen its payroll drop to 25,200 in Southern California, and analysts expect that number to shrink more.

Last week, Boeing, headquartered in Chicago, announced plans to eliminate 10,000 jobs, or about 6% of its workforce, across both commercial aircraft and military businesses.

As Boeing cut jobs and moved more work elsewhere, Kaiser Permanente recently became the largest private employer, with 32,800 workers in Los Angeles County alone, according to the Los Angeles County Economic Development Corp.

Northrop, with sprawling facilities in Redondo Beach, El Segundo and Palmdale, has been on an opposite trajectory to Boeing and has been on a hiring binge amid a surge in Pentagon contract wins.

In reporting its fourth-quarter results Tuesday, the company said the value of its backlog of military orders rose to a record $78 billion, up 22% from $63.7 billion a year earlier.

Still, Northrop said it lost $2.5 billion in the fourth quarter after it took a previously announced accounting write-down of $3.1 billion to reflect the lower value of its Litton Industries Inc. and TRW Inc. acquisitions.

Without the non-cash charge to earnings, Northrop said it would have posted a quarterly profit of $524 million, up 15% from $457 million a year earlier. Sales increased 4% to $9.2 billion.

For all of 2008, sales increased 6% to $33.9 billion, surpassing Boeing’s $32 billion in military revenue. No. 1 military contractor Lockheed Martin had $42.7 billion in revenue.

The upbeat outlook bolstered Northrop shares, which climbed $1.97, or more than 4%, to $48.58 in Tuesday’s trading. “Our underlying fourth-quarter operating results were outstanding,� Northrop Chief Executive Ronald D. Sugar said.

Despite rising concerns that the recession could entail cutbacks in Pentagon spending, Sugar said in a teleconference call with analysts that Northrop was still in a good position to weather a downturn.

The company develops and makes a variety of military and homeland security systems, including unmanned spy planes, satellites, weapon detection devices and nuclear submarines.

“We expect that the majority of our programs will be supported� in the 2010 military budget, Sugar said. “We believe that going forward our portfolio is sharply aligned with both traditional and emerging priorities.�

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