Defense contractors Lockheed Martin Corp and L-3 Communications Holdings Inc beat Wall Street profit estimates on better revenue and margins but offered differing full-year outlooks.

Lockheed, the industry leader, said share repurchases and strength in government satellite programs would boost full-year profit, while L-3 cut its 2010 earnings view on Tuesday, citing the loss of a logistics contract.

Shares of Lockheed were up modestly in afternoon trading, while L-3 drooped 4.6 percent.

J.P. Morgan analyst Joseph Nadol said Lockheed got a boost from its space systems margins but said in a note to clients that L-3 revenue disappointed.

At Lockheed, second-quarter net earnings rose to $825 million, or $2.22 a share, from $734 million, or $1.88 a share, a year earlier.

Profit from continuing operations came to $1.96 a share for Lockheed. Analysts on average expected $1.78 a share, according to Thomson Reuters I/B/E/S.

This is a firm that continues to execute pretty well on some of the key issues, whether pertaining to the F-35 (fighter) program or in terms of managing the hundreds of projects they do everyday, said Morningstar analyst Anil Daka.

Still, he said Lockheed's backlog, a measure of future work, had fallen 6 percent from the end of December 2009.

Defense stocks have been overshadowed by concerns that government budgets will flatten or decline. Major contractors are looking to cut costs and find new revenue sources as the U.S. Defense Department looks to pare expenses in coming years.

Lockheed has recently announced a number of steps to cut costs and improve operations, including offering voluntary buyout packages to certain workers and plans to sell two business units [ID:nN01125597].

Most of these are activities that are going to set us up to be more competitive going forward, said Bruce Tanner, Lockheed chief financial officer. There wasn't a large impact in the (second) quarter from those moves.

Lockheed said it now expected a profit of $7.15 to $7.35 a share from continuing operations for this year, compared with a prior forecast of $7 to $7.20 a share.

L-3, which makes explosive-detection devices and airport security scanners, said quarterly net income was $227 million, or $1.95 a diluted share, compared with $223 million, or $1.90 a share, a year earlier.

Excluding items, L-3 profit was $2.04 a share, compared with $1.93 expected by analysts.

The company said it now expects earnings of $8.05 to $8.25 for this year, compared with an April forecast calling for a profit of $8.13 to $8.33 a share.

L-3 also said it reached an agreement with the U.S. Air Force allowing a logistics unit to resume receiving federal contracts after a June suspension. The company said it agreed to pay fees and costs totaling $333,000 in the matter.

Shares of Lockheed were up 5 cents to $74.93 in afternoon trading, while L-3 was down 4.6 percent to $73.09. Lower consumer confidence figures left the overall U.S. stock market flat.

(Reporting by Karen Jacobs; Editing by Dave Zimmerman and Tim Dobbyn)