Wednesday, April 22, 2009

Boeing Needs Scrutiny

Boeing (BA) announced results and a few items need to be taken with a grain of salt. Boeing Chairman, President, and Chief Executive Officer Jim McNerney says "we are making progress toward our milestones on the 787 and other important programs." Later the press release goes on to inform investors that "the program saw orders for 32 airplanes cancelled by mutual agreement with customers during the quarter. Total firm orders are now 886 airplanes from 57 customers." Progress, order cancellations and a gnaw at the bones angst about the program still exist. The press releases speak to the first few milestones of testing but the program is still untested. Its all in the nuance about this one.

Speaking of nuance under Segment Results for commercial they speak to the margins which are shrinking. They slip in an interesting term in this sentence "That impact, somewhat offset by a refinement in cost estimates, resulted in the charge of $347 million," What is a refinement in cost estimates? Refining means to take out impurities. They have soft pedalled an increase in costs and want investors to believe something has been refined.