It sounds crazy, but often, the way the stock market works, bad news is good news.
Case in point: On Wednesday, aerospace giant Boeing
Yes, in addition to delaying production, Boeing slashed the number of planes it will deliver in 2009 by nearly 80%. This means that its long line of impatient customers -- Continental
It also suggests to yours Fool-y that potential customers such as United
Up is down, black is white, bad is good
Bad news, but, apparently, it's also good news. Boeing shares have risen nearly 5% since the news. Why investors view a halving of previous delivery estimates, and another six-month delay in production, as "good news," I've got two theories:
- Investors thought the delay would be longer than six months, or perhaps worse ...
- They feared the delay might be shorter.
Had Boeing pushed the envelope and targeted another three-month extension on the 787, then failed to meet its deadline once again, investors' faith in management would almost certainly have broken. As it is, Boeing is building in two months more than even it thinks are needed to wrap this project up, the idea being to give itself a "safety margin" in case unexpected problems crop up during testing and certification of the 787.
So in retrospect, perhaps it was also good news when Boeing lost the KC-X Tanker contract to Northrop Grumman
KC What? X Who? Get the lowdown on Boeing's other airborne tragicomedy: