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Diversified manufacturing giant United Technologies (UTX - Free Analyst Report) has reported somewhat mixed third-quarter results. Revenues, at $13.53 billion, edged up modestly from the last year's comparable figure, but came in slightly below our target of $13.95 billion. With the real estate market still wobbly, demand for elevators and climate control systems remains sluggish, undermining results at United's Otis and Carrier divisions, respectively. Too, the aerospace sector has been in a holding pattern for the past several years, due to notably lower business and leisure travel, sapping demand for helicopters at the Sikorsky unit.

Nevertheless, the company earned $1.30 a share in the latest quarter, two cents better than our estimate and nicely ahead of the prior-year figure of $1.14. The primary factor behind the solid showing was lower aggregate costs, thanks largely to UTC's ongoing restructuring efforts. In fact, each of the company's six divisions realized operating income gains and margin expansion, most notably its jet engine business Pratt & Whitney and UTC Fire & Security.

Looking ahead, orders for commercial spare engines have been trending higher, which augurs well for UTC's aerospace units in the December period and beyond. In addition, the company remains on the lookout for acquisition targets, and plans to spend about $3 billion for that purpose this year alone.

In light of the company's moderately improved outlook and ongoing cost-cutting initiative, we have raised our 2010 and 2011 share-net estimates by $0.03 and $0.10, respectively, to $4.73 and $5.30.

About The Company: United Technologies is a diversified industrial manufacturer that operates in six business segments. Pratt & Whitney (24% of ’09 revenues, 26% of operating profits) makes & services aircraft engines. Otis (22%, 35%) manufactures, and services, elevators. Carrier (21%, 11%) makes heating, ventilating, and air-conditioning equipment. Sikorsky (12%, 9%) makes helicopters. Hamilton Sundstrand (11%, 12%) produces aerospace and industrial products. UTC F&S (10%, 7%) provides security and fire protection services. The company also has a power division dealing in fuel cells.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.