General Dynamics profit tops view; shares off

The maker of tanks and ships raised its profit forecast for this year, but its shares were down 2 percent.

"Considering the stock has already rebounded 80 percent from the lows back in March and new guidance for this year was right in line with consensus forecasts already, there was no new news to drive the stock today," said Matt Collins, a capital goods analyst with Edward Jones.

Meanwhile, shares of communications equipment maker Harris Corp gained more than 9 percent as analysts raised their price targets and profit estimates, citing better-than-expected quarterly results from Tuesday, fueled by military demand for the company's tactical radios.

At General Dynamics, net earnings came to $572 million, or $1.47 a diluted share, for the third quarter, down 10 percent from $634 million, or $1.59 a share, a year earlier.

Excluding discontinued operations, earnings were $1.48 per share. On that basis, analysts on average expected $1.40, according to Thomson Reuters I/B/E/S.

Revenue rose 8 percent to $7.72 billion.

A five-week production shutdown at the Gulfstream business-jet unit in response to economic weakness affected the aerospace division, where sales were down 18 percent in the quarter and operating profit sank 56 percent.

General Dynamics said business jet orders were improving, and added that large-cabin models were selling better than mid-size aircraft.

"The business jet market has steadied and is seemingly on course to make slow steps toward recovery," General Dynamics Chief Executive Jay Johnson said during a conference call.

Revenue and operating earnings rose in General Dynamics' three defense-related business segments, aided by increased demand for armored vehicles and ammunition.

General Dynamics did not give a 2010 forecast but said it expects to benefit from defense spending on equipment that is helpful to warfighters.

The company said it now expects full-year profit from continuing operations of $6.15 to $6.20 a share this year, likely at the lower end of the range, compared with a July view of $6.05 to $6.15. Analysts expect $6.18 a share.

On Tuesday after the closing bell, Harris also raised its full-year forecast on increased U.S. Army orders for its tactical radios, which distribute voice and data in an encrypted form.

General Dynamics' shares fell $1.34, or 2 percent, to $64.44 in afternoon trading on the New York Stock Exchange, while Harris was up $3.66, or 9.7 percent, at $41.60.

(Reporting by Karen Jacobs; editing by John Wallace and Maureen Bavdek)