Litton Industries said Tuesday that earnings per share in the current fiscal year will be "flat to slightly higher" than in fiscal 1985, which was lower than expected and resulted in the firm's stock tumbling 7.5%.
Because Litton recently bought about 35% of its own stock, the company's overall net income for the fiscal year ended July 31, 1986, probably will decline by as much as one-third, analysts said.
"That's a pretty good hit," said Gregory Kieselmann, an analyst with Morgan, Olmstead, Kennedy & Gardner in Los Angeles.
Litton President Orion L. Hoch blamed the expected results on "uncertainties" in the petroleum industry that have been more serious than the Beverly Hills-based conglomerate expected.
"Most analysts were aware that the seismic (oil-services) part of their business was having problems," Kieselmann said. "Obviously, the depth of the problem was not known."
On the New York Stock Exchange, Litton's stock fell $5.875 per share to close at $72.
For the fiscal year ended July 31, 1985, Litton had net earnings of $299.5 million, a 4% decline from the previous year, while income from continuing operations rose 6.8% to $297 million.
Sales for the year fell to $4.59 billion from $4.61 billion in fiscal 1984.
As part of a major restructuring, Litton sold divisions with combined annual sales of $1 billion since 1983.
Hoch, in a speech to investment managers in London, gave no specific estimates of 1986 earnings per share. Earnings per share in fiscal 1985 were $7.27 on about 41 million shares outstanding before the stock buy-back.
Wall Street analysts generally had been predicting that Litton would earn $9 per share in fiscal 1986, or about $248 million in overall net income. Laurence Lytton, an analyst with Drexel Burnham Lambert, on Tuesday projected that Litton will earn about $200 million in fiscal 1986.
"In the oil-service business, there is no sign of light and in fact it's getting darker," the analyst said. Litton is "facing a much more difficult environment in defense" and its non-defense businesses are "sluggish," he said.
A Litton spokesman declined comment on predictions of lower net income for fiscal 1986. Litton generally doesn't make financial projections, he said, adding that Hoch had mentioned only overall earnings per share in his speech.
"The current uncertainties in the petroleum market are more serious than had been anticipated," Hoch said. "We expect that sales for our resource exploration group may be considerably affected this year although it will continue to maintain its good margins of profitability."