Rockwell Collins Inc. (NYSE: COL) is trading lower after the defense firm said on Friday morning that is lowering its guidance for fiscal year 2013. The blame is over unprecedented uncertainty around military cuts expected in 2013 and over congressional plans.

As far as the guidance, the operating earnings for 2013 were $4.30 to $4.50 per share on sales of $4.6 to $4.7 billion. Estimates were $4.63 EPS and $4.87 billion.

Rockwell Collins said that is total segment operating margins are now expected to come in a 21% to 22% range. The company said that the Budget Control Act of 2011 requires reductions to U.S. defense spending starting in January 2013 and today’s guidance is meant to include this impact. Rockwell Collins also cast a wide net by saying that this uncertainty is there for all businesses supporting the Department of Defense.

The assumption is that spending cuts will occur and it expects government programs to transition from development into production. It also talked up the launch of new air transport and business aircraft, but it remains focused on shareholder value and long-term growth targets.

Rockwell Collins is a $7.45 billion company by value and shares are down almost 3% at $51.00 versus a 52-week range of $46.37 to $61.46.

This likely will not be the last defense warning you hear in the aerospace and defense sector.

JON C. OGG

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