Rockwell Collins reduces FY2014 outlook, stock slides

Shares of Rockwell Collins closed down almost 6 percent, at $70, on Friday after the company provided earnings and revenue guidance for fiscal 2014 that included lower revenue from equipment sales for business jets.

The Cedar Rapids avionics and communications supplier expects earnings of $4.30 to $4.50 per share on revenue of $4.5 billion to $4.6 billion in fiscal 2014. The forecast does not include the impact of Rockwell Collins' planned acquisition of ARINC, which is expected to close shortly after receiving regulatory approval.

Kelly Ortberg, Rockwell Collins president and CEO, said the company expects market conditions in fiscal 2014 to be similar to what it has experienced this year.

"Our assumption is that sequestration is here to stay and, in accordance with the Budget Control Act, 2014 represents the bottom for this defense cycle," Ortberg said. "We've been proactive in planning our business and controlling costs to sustain profitability, while positioning the business to grow as the market recovers."

Ortberg said the Boeing 787 and  Airbus A350 aircraft should provide strong revenue growth for Rockwell Collins's air transport business. The company expects "a slight decline in business jet revenue" due to depressed production rates at the low end of the market, he added.

Revenue for the company's government systems unit is expected to decline in fiscal 2014 due an anticipated $200 million impact from a full-year of sequestration cuts, Ortberg said.

This reduction is expected to be partially offset by an increase in international defense sales and increased production in avionics, he said.