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Raytheon Co., the world's largest missile maker, said second-quarter earnings rose 29 percent as it booked orders for military-training services and the Patriot missile-defense system. The company increased its 2007 profit forecast.

Sales and earnings topped analysts' estimates. Profit from continuing operations climbed to $356 million, or 79 cents a share, from $276 million, or 61 cents, a year earlier, the Waltham, Massachusetts-based company said today in a statement. Sales increased 9 percent to $5.42 billion, in part because of increased missile sales at the company's Tucson operations.

Chief Executive Officer William Swanson sold Raytheon Aircraft Co. for $3.3 billion on March 26, one day into the second quarter, to focus on government and military work. He pushed the company to win contracts in new areas, including a U.S. Army award in June for as much as $11.2 billion for training. Profit in the integrated-defense unit gained 20 percent on increased work on U.S. missile-defense systems.

"Raytheon has once again put in a good set of results and is now fully able to concentrate on its defense business now that the RAC disposal is settled," Robert Stallard, a New York- based analyst with Banc of America Securities LLC, wrote in a note to clients today. He rates the shares "neutral" and doesn't own any.

Shares of Raytheon fell 33 cents to $54.82 at 1:40 p.m. in New York Stock Exchange composite trading. They have gained 3.7 percent so far this year.

Increases Forecast

The average of 16 analyst estimates compiled by Bloomberg was for profit of 69 cents a share in the quarter. Sales were projected at $5.3 billion.

The company raised its 2007 forecast for per-share profit from continuing operations by 20 cents to a range of $3.05 to $3.20. Raytheon maintained its projection that 2007 sales will rise to $21.4 billion to $21.9 billion, from $20.3 billion in 2006. Analysts estimate Raytheon will earn $3.05 this year on revenue of $21.7 billion.

The Army training contract is one of a few awards that gave the company confidence to increase its forecast, Swanson said on a conference call. Others included a more than $1 billion Navy contract in June for a satellite-communications system that will go on more than 300 ships, and a July award from the Army for thermal-weapons sights, which has a potential value of $2.6 billion.

Providing Technology

"These wins are all about providing the war fighters with the technology they need for mission success," Swanson, 58, said on the call. "These program wins demonstrate the broad capabilities and unique products and service innovation that the company can bring to its customers."

Raytheon sold its business-jet unit to Onex Corp. and Goldman Sachs Group Inc. in the company's largest divestiture. The unit has been classified as a discontinued operation since December.

Including a portion of the after-tax gain of $2.4 billion on that sale, net income more than quadrupled to $1.34 billion, or $2.97 a share, from $310 million, or 69 cents, a year earlier.

Raytheon is using proceeds from the disposal partly to repurchase shares and retire debt. Second-quarter results included costs of $39 million, or 9 cents a share, for the early redemption of $1 billion of debt. The company also bought back 9.6 million shares for $526 million.

Sales rose at all six divisions, and operating profit climbed at four.

That included the company's missile-systems operations in Tucson, where sales increased to $2.38 billion in the first six months this year, up from $2.10 billion during the same period in 2006. Operating profits also rose in the first two quarters of 2007, to $254 million, up from $232 million the year before.

The biggest growth came in the network centric-systems division, where revenue gained 20 percent to $1.05 billion, and operating income jumped 53 percent to $139 million on Army programs the company didn't identify.

Raytheon's integrated defense-systems unit increased sales 12 percent to $1.17 billion and raised profit to $212 million on the missile-defense work.