Lazard Frères Revises Newport News Estimate

Lazard Frères & Company Co. LLC's Equity Research Department has revised its earnings estimate for Newport News Shipbuilding to $2.55 per share in full-year 2000 from $2.60 per share, but continues its 'buy' rating for the shares. The revision is based on adjustments associated with the company's recognition of revenue from the CVN-77 aircraft-carrier contract. The CVN-77 is the last Nimitz carrier and is in the early stage of planning. Lazard Frères had originally projected Newport to recognize approximately $100 million of revenue in 2000, which represents preliminary planning and design work. Based on guidance from management, recognition of revenue is project to push back further than originally planned, with an approximate reduction of $30-50 million in 2000. While this does not result in a loss of revenue, based on the slower rate of recognition, Lazard Frères has revised its revenue estimate to $1.923 billion from $1.953 billion. Full-scale construction of CVN-77 remains slated to begin in 2001. Based on the steady, programmed nature of Newport's backlog and earnings, Lazard Frères said NNS shares represent an excellent value in the upper $20s. Newport has remained focused on its core business of constructing and servicing the Navy fleet and has steadily repurchased its own shares.