Boeing Team Wins Satellite Contract

SEATTLE — A team led by Boeing Co., the world’s biggest aerospace company, beat Lockheed Martin Corp. for a contract to build spy satellites for the National Reconnaissance Office.

Analysts estimated the value of the contract, which runs through 2010, at $4.5 billion. The NRO said the contract’s cost is classified information. Boeing’s team includes Hughes Electronics Corp., Raytheon Co., Eastman Kodak Co. and Harris Corp.

The victory is Boeing’s second in the last year over Lockheed for a major government space contract. Boeing also won most of a $3-billion Air Force award in October to launch heavy-lift rockets, a field Lockheed traditionally has dominated. The loss raises further questions about Lockheed’s space and strategic missiles business, which has struggled with launch failures and declining revenue, analysts said.

“It was pretty important for Lockheed Martin to win this--they were the incumbent,” said Todd Ernst, an analyst with Prudential Securities Inc. who has a “hold” rating on the stock. The loss, he added, “might be a result of the problems that they’ve had.”

Lockheed Martin shares fell $1.63 to close at $35. Boeing fell 50 cents to $44.94. Both trade on the New York Stock Exchange.

The NRO said Friday that Boeing will develop, launch and operate the next generation of imagery reconnaissance satellites. Lockheed had been the dominant company in the classified satellite field since the 1960s, said Pierre Chao, an analyst with CS First Boston Corp.

In a report, he said the award “enhances Boeing’s credibility in the sector” and underscores the gains it has made since its 1996 agreements to buy McDonnell Douglas Corp. and parts of Rockwell International Corp. The purchases expanded the space and defense side of Boeing’s business.

Lockheed Martin has disappointed investors with four profit warnings since November, blaming its problems on fewer commercial-satellite orders and delays in some of its key rocket and aircraft programs.