Chicago, July 16: Boeing Co. said today it will take a second-quarter charge of about $1.1 billion as a result of its ailing satellite businesses, reflecting higher launch costs and weakened demand. The aerospace giant said it is pulling out of the commercial satellite launch business and will focus exclusively on the US government as a satellite customer, resulting in higher mission costs.
"Launch and orbital systems (business) has suffered from a terrible marketplace, from some technology problems and from some performance problems," CEO Phil Condit said on a conference call. The satellite business, Condit said, is the ``only exception`` to a Boeing defence portfolio that is doing very well. Company executives said the charge, equal to 87 cents a share, shouldn`t alter its cash situation since the costs will be spread out over seven years.
Nonetheless, the announcement reflects another significant setback for a company already grappling with the worst downturn in commercial aviation history. Besides the air travel slump, Boeing has been struggling with a difficult satellite market since it acquired the satellite-making holdings of Hughes Electronics Corp. in October 2000. The news sent Boeing shares down $1.26, or 3.6 percent, to $33.32 in midday trading on the New York Stock Exchange. Bureau Report