The document provides an agenda and overview of Boeing, including: - Boeing's divisions and key products in commercial aircrafts and defense segments. - Financial highlights like 2010 revenue of $64.3 billion and net income of $3.3 billion. - Management discussion of lower 2010 revenue and higher operating earnings. - Industry drivers of air travel growth and aerospace market value forecast. - Competitive analysis shows Boeing is largest player and competes primarily with Lockheed Martin, BAE Systems.

2. Agenda
 Company Overview
 Management Discussion and Analysis
 SWOT Analysis
 Industry Overview
 Porters Five Force Model
 Competitors
 Valuation
 Recommendation

3. Company Overview
 Boeing is the world’s largest aerospace company and leading
manufacturer of commercial airplanes and defense, space and
security systems
 It supports airlines and U.S. & allied government customers in
more than 90 countries
 Headquartered out of Chicago Boeing employs more than
160,000 people across the United States and in 70 countries
 Products include commercial and military
aircraft, satellites, weapons, electronic and defense
systems, launch systems, advanced information and
communication

4. Boeing - Divisions
Market Segment ( 2010)
Commercial Aircrafts
Revenue %
50%
Defense, Space & Security(BDS)
Boeing Military Aircraft (BMA)
22.14%
Network and Space Systems
(N&SS)
14.7%
Global Services and Support
(G&SS)
12.83%
Boeing Capital Corporation (BCC)
0.99%

5. Commercial Aircraft-Products
 Manufactures family of jetliners – Cargo and passenger
 Narrow body model-737
 Wide body model-767 and 777
 Under Development wide body models-747-8 and 787
 Offers aviation services support, aircraft
modifications, spares, training and technical advice

6. Boeing – Commercial Aircrafts
 Delivered 462 airplanes in 2010
 Revenue grew by 11% for the year 2010
 Boeing 787 has 847 orders from 57 customers in 37
countries
 More efficient production lines
Year
Commercial Airplane Deliveries
2006
398
2007
441
2008
375
2009
481
2010
462

7. BDS - Products
 Boeing Military Aircraft
 Engaged in R&D production and modification of manned and unmanned
military weapons
 Mobility – AH-64 Apache, F/A-18 E/F Super Hornet
 Network and Space Systems Segment
 Assists customers in transforming their operations through network
integrations – International Space System, Satellite System
 Global Services and Support Segment
 Operates, maintains, trains, upgrades and provides logistic support functions
for military platform and operations – KC-767 International Tank
 82 % of revenues of BDS department have come from defense

8. Geographic Sales
59%
11%
5%
12%
6%
3%
1%
1%
1%

9. Key Financials
 2010 Net Income of $3.3 billion vs. $1.3 billion in 2009
 Market Capitalization: $58.6bn
 P/E: 17.53
 Current Share Price: $79.39
 Operating Margin: 7.31%
 Net Profit Margin: 5.14%
 Dividends Yield: 2.10 %

10. 2010 Financial (US dollars in millions except per share data)
Recent Financials
2010
2009
2008
2007
2006
Revenues
64,306
68,281
60,909
66,387
61,530
Net
Earnings
3,307
1,312
2,672
4,074
2,215
EPS
4.46
1.87
3.65
5.26
2.84
Operating
Margin
7.7%
3.1%
6.5%
8.8%
4.9%
Contractua
l Backlog
303,955
296,500
323,860
296,964
216,563
Total
Backlog
320,826
315,558
351,960
327,137
250,211

11. Stock Movement
Source :http://finance.yahoo.com/q?s=BA&ql=0

12. SWOT Analysis
Strengths
• Growth through acquisitions
• Strong focus on research and development
• Realignment for growth and expansion to
new markets
Opportunities
• Boeing's global outlook for aircraft demand
• Surge in the US defense spending
Weakness
• Highly leveraged
• Declining profits and margins
• Sluggish performance of business divisions
• Dependence on United States Department of Defense as they
account for 82% of BDS revenue in 2010.
Threats
• Increasing prices of titanium and aluminum
• Increasing fuel prices
• Intense competition
• Heavy dependency on US government contracts
• Government regulations
• Environmental regulations

13. Management Discussion &
Analysis

Revenues in 2010 decreased by 6 % compared to 2009


No deliveries on 747 program because of transition from 747-400 to 747-8


Lower 777 deliveries as production rate changed from 7 to 5 per month
BDS revenues decreased by $1,718 m due to lower revenues in Network and Space Systems Segment
Operating earnings in 2010 increased by $ 2,875 m compared to 2009


Commercial Airplanes earnings increased by $ 3,589 m primarily due to $ 2,693 m costs related to first
three 787 flight test aircraft included in R & D in 2009
Long term outlook for the industry remains positive due to fundamental drivers of air travel growth such as:

Economy growth

Trade

Liberalization of air traffic rights between countries

14. Management Discussion &
Analysis
 To increased the manufacturing of existing
commercial airplanes
 The company expects the R&D costs to go down in the
future

15. R&D
2010($ mn)
Total
2838
82.74%
74.96%
589
582
486
8.95%
12.84%
417
397
298
6.10%
7.87%
130
122
149
3.15%
Global Services &
Support
5383
10.12%
Network & Space
Systems
2975
14.29%
BMA
2008 ($ mn)
72.19%
Commercial Airplanes
2009 ($ mn)
1.88%
3.94%
4121
6506
3786

16. Industry Overview

Industry – Aerospace and Defense
 Revenues accrued by manufacturers from civil and military aerospace and defense procurements

Major products and services:
 Aircraft
 Aircraft engines and engine parts
 Other aircraft parts and auxiliary equipment

In 2014, the market value is expected to be $1,190.5 billion, an increase of 29.3% since 2009

Defense is the largest segment accounting for 71.8 % of the sector’s total value
 $ 3.6 trillion market for 30,900 new airplanes over the next 20 years

17. Industry Overview
 Global aerospace and defense industry segmentation:
Category
Americas
22.0 %
Asia – Pacific




59.1 %
Europe
 External Drivers:
% Share
19.0 %
Total
100 %
Federal Funding for Defense
Demand from international airlines
Industry systems and technology
Demand from domestic airlines

18. Porters Five Force Analysis
 Supplier Power (Moderate)
 Suppliers are small. However, the high quality inputs provided by suppliers
dilute the bargaining power of players
 The quality and availability of these inputs is highly important to the quality
of the end products in the aerospace and defense industry, increasing the
power of the suppliers
 Too many suppliers
 Buyer Power (Moderate)
 Large size of competitors due to merger activity
 Players are limited as Airbus and Boeing have a virtual duopoly
 Buyers typically government organizations which flex their financial
muscles to dilute the bargaining power of players

19. Porters Five Force Analysis
 Threat of New Entrants (Low)
 High capital outlay and expertise
 The arms industry has become highly concentrated, nationally and
internationally
 Threat of Substitutes (Low)
 No real threat of substitutes in defense and aircrafts, however air freight
section might be affected with increase in concerns of carbon emissions as
companies are seeking eco-friendly reputation
 Degree of Rivalry (Strong)
 Due to duopoly, Airbus and Boeing are the sole rivals and they are quite
evenly matched
 Competition is intense in terms of winning defense contracts and
companies use innovation and new technology to differentiate their service

20. Historic Growth
Year
$ Billion
% Growth
2005
658.8
2006
737.7
12 %
2007
830.9
12.6 %
2008
917.3
10.4 %
2009
920.6
0.4 %
CAGR – 2005 - 2009
8.7 %
CAGR – 2009 – 2014
5.3 %

21. Key Players
Companies
Market Share
Boeing
7.4 %
EADS
6.5 %
Lockheed Martin Corporation
4.9 %
BAE Systems Plc
3.8 %
Other
77.4 %

22. Competitor Analysis (Fiscal year
12/31/2010)
Comparables
Revenue (USD billions)
Boeing
Lockheed Martin
BAE Systems Plc
64
46.10
35.258
3.38
2.93
1.758
Operating Margin (%)
7.06 %
8.50 %
7.4 %
Profit Margin (%)
5.27 %
6.34 %
7.0 %
Debt/Capital(%)
81.3 %
57.5 %
36 %
ROE (%)
135.15 %
68.40 %
20.3 %
ROA (%)
5.06 %
6.71 %
4.0 %
17.57 %
9.77 %
270.54 %
Net Income (USD
millions)
PE (%)