Costly Boeing Awaits a Boom

Article Excerpt

THE BOEING CO. $76 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Above average) plans to wind down its money-losing Connexion division, which provides high-speed Internet access to airplane and ship passengers. When Boeing launched Connexion in April 2000, it hoped to eventually install the equipment on 5,000 aircraft. After 9/11, interest in Connexion fell as weak passenger volumes forced airlines to cut costs. Right now, fewer than 150 planes use the service. The shutdown will cut Boeing’s 2006 profit by $0.26 a share, but add $0.15 to its 2007 earnings. Boeing’s stock has tripled since 9/11, as the travel industry rebounded. Airlines will soon have to replace aging aircraft, and production delays at Boeing’s chief rival Airbus have also helped drive the stock higher. Boeing now trades at 29.6 times its forecast earnings for 2006 of $2.57 a share. That’s expensive for a company closely tied to a cyclical industry like airlines. Boeing is still a hold…

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