(Corrects Tortoriello's rating to ``buy'' in the fourth paragraph of a story published Oct. 24.)

Oct. 24 (Bloomberg) -- Boeing Co., the world's second- biggest commercial-airplane maker, said quarterly earnings rose a greater-than-estimated 61 percent on surging orders from Asia and the Middle East. Sales for next year will be below an earlier forecast, causing the shares to fall.

A six-month delay in delivering the new 787 Dreamliner prompted Boeing to cut next year's projected shipments by as many as 40 planes, or 7.7 percent. The 2008 profit outlook is unchanged, Chicago-based Boeing said today in a statement.

Boeing delivered 9 percent more commercial aircraft in the third quarter than a year earlier, putting it closer to eclipsing Airbus SAS as the biggest planemaker. Net income rose to $1.11 billion, or $1.44 a share, from $694 million, or 89 cents, a year earlier. Profit topped analysts' average estimate of $1.26 a share. Boeing raised its full-year sales and earnings forecasts.

``It goes up from here,'' Richard Tortoriello, an analyst at Standard & Poor's, said of Boeing's stock price. He has a ``buy'' rating on the shares. ``Boeing is going to be producing very strong cash flows and earnings growth for the next three to five years.''

Sales grew 12 percent to $16.5 billion, beating the $16 billion average estimate of 12 analysts surveyed by Bloomberg. Boeing, which books profit when planes are delivered, handed over 109 planes to customers including Emirates, the biggest Arab airline, and All Nippon Airways Co., Japan's largest domestic carrier.

Boeing cut next year's delivery forecast to as few as 480 planes, hurt by a six-month delay in Dreamliner shipments.

Boeing fell 69 cents to $94.26 at 4:16 p.m. in New York Stock Exchange composite trading. The shares have gained 6.1 percent this year.

Record Backlog

Boeing boosted its 2007 profit forecast to $5.05 to $5.15 a share from $4.80 to $4.95. Revenue is now projected to be $66 billion, up from a previous forecast of $65 billion. The average estimate of 21 analysts surveyed by Bloomberg was for profit of $5.04 a share. Sales were projected to be $65.5 billion.

While next year's sales forecast was cut to $67.5 billion to $68.5 billion from $71 billion to $72 billion, Boeing stuck with its earnings forecast of $5.55 to $5.75 a share.

Chief Executive Officer James McNerney, 58, is ramping up assembly lines 12 percent this year as he works through a record backlog of more than $200 billion in orders.

Boeing said it will deliver 440 planes this year, up from 398 last year. Through the end of the third quarter, Boeing deliveries were up 12 percent to 329 planes from 295, led by 81 of its 737 models.

Faster Assembly

Assembly time for 737s, the world's most widely flown airplane, has been cut in half to 11 days since 1997 helped by converting production to a moving assembly line. Boeing, which also is converting 777 production to a moving line, is churning out 777s at a peak rate of seven a month.

McNerney hired 1,178 employees last quarter for the company's commercial-aircraft unit and sped up assembly to deliver 20 Boeing 777s, seven more than a year ago. Boeing piled up orders for 919 planes as of Oct. 16, closing in on the record 1,044 set last year.

Boeing last year derived 46 percent of its $61.5 billion in revenue from commercial aircraft and about 53 percent from its defense unit, which makes fighters and cargo jets. The company raised its 2007 defense sales estimate to about $32 billion from a previous projection of $31 billion.

The company, the world's second-biggest defense contractor after Lockheed Martin Corp., is looking to generate foreign sales of F-15s and other fighters as the U.S. curbs spending on large aircraft programs to focus on needs of ground troops in Iraq and Afghanistan.

Supply Bottlenecks

McNerney spent more on research and development last quarter as he sought to meet a May delivery deadline for the 787 Dreamliner.

Next year, Boeing will spend $3.2 billion to $3.4 billion or research and development, an increase from earlier forecasts of $2.8 billion to $3.0 billion, it said today. Half the increase is going to 787 programs.

McNerney is placing additional Boeing employees at Dreamliner supplier facilities to ``resolve production and procurement bottlenecks,'' he said on a conference call today.

On Oct. 10, Boeing delayed the test flight for the second time and postponed delivery of the first plane six months to November or December 2008 because of parts shortages.

Boeing last week replaced 787 manager Michael Bair, 51, who had been with the program from its inception three years ago, with 45-year-old Pat Shanahan, who most recently led Boeing's missile-defense programs.

The 787 is Boeing's most successful new aircraft in advance sales, with more than 700 orders valued at about $120 billion. The planemaker is struggling to finish work that suppliers should have completed at their plants.

To contact the reporter on this story: James Gunsalus in New York jgunsalus@bloomberg.net.

Last Updated: October 25, 2007 11:36 EDT