Earnings Preview: United Technologies

OVERVIEW: The maker of Otis elevators, Sikorsky helicopters and Carrier heating and ventilating, last month again backed its 2008 forecasts of revenue of more than $60 billion and earnings per share of between $4.80 and $4.95. That was in line with Wall Street expectations.

Last week, the company increased its dividend by more than 20 percent, signaling confidence in strong earnings. On Monday, it abandoned a $2.6 billion unsolicited offer it made in February to buy Diebold Inc., frustrated because the North Canton, Ohio-based company wouldn't discuss the offer and delayed releasing its financial information. It had hoped to broaden its security business and expand into China through the acquisition.

BY THE NUMBERS: On average, analysts polled by Thomson Financial expect United Technologies to earn $1.27 billion, or $1.32 a share, on revenue of $15.1 billion. That's up from $1.19 billion, or $1.21 per share, on revenue of nearly $13.9 billion in the third quarter of 2007.

ANALYST TAKE: Analyst Nigel Coe of Deutsche Bank warned investors in a note Monday of slowing global growth. He expects United Technologies to "remain confident in its ability to execute in a tough 2009," although he said the company will face difficulty finding opportunities for growth in most of its businesses. He reiterated a "Buy" rating, though he lowered his 2009 earnings per share estimate by 4 percent, to $5.26, citing "market deterioration." Analysts surveyed by Thomson Reuters expect earnings per share next year to be $5.44.

WHAT'S AHEAD: United Technologies has benefited from diverse businesses that have so far helped the company avoid the impact of the financial crisis that has hurt others. All but one of United Technologies' business reported rising revenue in the second quarter. The exception was Carrier, which has been hurt by the crash of the housing market.

In addition to potential risks from a global slowdown, some analysts say the rising dollar could hurt United Technologies. Until recently, the dollar was falling, making U.S. exports more attractive overseas. Revenue for United Technologies' international business was $34.16 billion last year, or about 62 percent of total revenue.

STOCK PERFORMANCE: Shares of United Technologies dropped by 1 percent in the July-September period. Because the conglomerate has little exposure to the battered financial sector, its performance is better than the broader market. In the same period, the Dow Jones industrial average, of which United Technologies is a component, dropped by 4.7 percent and the Standard & Poor's index fell by 9.3 percent.

Since Sept. 30, shares of United Technologies have dropped 9.9 percent.