United Technologies Corp. shares climbed 1.6% in pre-market trading Wednesday after the conglomerate said Q3 earnings rose 20%, beating analyst estimates. Net income for the maker of Pratt & Whitney jet engines and Otis elevators was $1.2 billion ($1.21/share), up from $996 million ($0.99/share) a year earlier. Revenue was up 14% to $13.9 billion from $12.2 billion, while organic revenue climbed 9%, having grown 10% in each of the company's first two quarters. Net of a $0.04 tax benefit, EPS were $1.17; analysts had expected earnings of $1.16 a share on revenue of $13.5 billion. "While market conditions in Carrier's North American residential business are clearly challenging, its other three global businesses delivered double digit earnings growth," CEO George David said (full earnings call transcript later today). For the full year, UTX tightened its earnings guidance to between $4.22 and $4.25 a share, from a previous $4.15 to $4.25. It pegged full-year revenue at around $54 billion. Analysts had been calling for full-year earnings of $4.24/share on revenue of $53.3 billion. In a post-earnings note, Deutsche Bank analyst Nigel Coe was upbeat on the company's strong performance in the face of ongoing housing market weakness: "We believe the stock could do well today since this was another metronomic-like performance and in stark contrast to the mixed trends seen thus far from industrial companies." On Oct. 10, UTX's Pratt & Whitney unit was chosen by Mitsubishi Heavy Industries Ltd. for use in its Mitsubishi Regional Jet, the first Japanese-manufactured passenger aircraft in 40 years, a move BofA aerospace analyst Robert Stallard called "a considerable boost." The engine burns about 12% less fuel and cuts noise by 50% over traditional engines (full story).
Commentary: The Long Case for United Technologies • Mitsubishi Heavy Selects Pratt & Whitney Jet Engine
Stocks to watch: UTX. Competitors: GE, BA. ETFs: ITA, PPA
Earnings call transcript: United Technologies Q2 2007
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