A year of independence seems to have done Teledyne Technologies Inc. a world of good.

Since spinning off from Pittsburgh’s Allegheny Technologies nearly a year ago, Century City-based Teledyne has seen its stock stay fairly strong even amid current fluctuations on Wall Street.

But company officials are predicting that their firm, which makes electronic and communications products as well as aerospace components, will see earnings drop next year as it aggressively expands into the broadband communications field, including fiber-optic and wireless applications.

“We’re going to be spending $20 million (on fiber optics), half of which is research and development, which hits earnings immediately,” said Teledyne Chief Financial Officer Robert J. Naglieri. “At the end of the day, it will definitely hurt earnings, but you’ve got to spend money to make money.”

That investment has already affected earnings. For the third quarter ended Oct. 1, the company reported net income of $9.7 million (32 cents per diluted share), down 35 percent from $13.2 million (49 cents a share) in the year-earlier quarter. Revenues were basically flat at $201.1 million from $200.4 million.

Nevertheless, observers remain positive on both the company and its share price. All four analysts who follow the firm have a “buy” rating on the stock, and agree that in making the capital expenditures for fiber-optic components, Teledyne is positioning itself well for the future.

“They’re doing well,” said Mark Jordan, an analyst at A.G. Edwards & Co. “One of the things with Teledyne is that their independence really has allowed the company to look at the businesses they’re involved in and put together a business strategy for the longer term. The investments they’ve made have a short-term impact on earnings, but it’s something we would expect to see as a positive sign of growth, long term.”

Teledyne has years of experience in making fiber-optic components for the military, but only recently decided to expand into the commercial market. Nevertheless, it has already signed contracts to supply these parts to three original equipment manufacturers.

“To have three contracts in such a short time means they’re doing pretty well,” said Steven Wortman, an analyst at Sidoti & Co.

But he points out that lower earnings is a concern, and it can’t all be attributable to the amount of cash being poured into broadband. Demand for the company’s small-aircraft engines is likely to be soft next year, and the same can be said for the turbine engines for missiles it makes. But the company reached an agreement with Boeing Co. to do additional work as a subcontractor for the controversial limited national missile defense program. That is scheduled to start next April and Teledyne projects that it could see $500 million in revenue from that project.

The incoming administration of President-elect George W. Bush is likely to be more generous with the limited missile defense program and defense spending in general than the Clinton administration, which Teledyne figures can’t hurt.

“Without getting into politics, we think Bush is more bullish on a strong military, which plays to our strength,” Naglieri said.

He acknowledges, however, that it may be some time before that translates into real business, given how long it takes to appropriate and disburse government defense funding, something analysts are cautious about as well.

“These programs are down the road and difficult to pinpoint,” Sidoti’s Wortman said. “I don’t think (share prices in) aerospace companies are going to spike up because of this. However, I keep saying it is a good place to have your money in a slowing economy where there is likely to be (more defense spending).”

Then, too, the fact that the company is pushing into the fiber-optics field shows it is preparing for the fluctuations in aerospace. And even with earnings down, Teledyne has plenty of cash on hand, thanks to a secondary offering that netted around $90 million.

“The excitement over fiber optics is warranted, driven by existing companies as well as startups that need these components,” Wortman said.

That is why the company’s stock price, despite the short-term earnings concerns that took it from its historic high of $30.56 a share, has stayed well-supported around $20 a share.

Jordan’s 12-month target for the stock is $30, while Wortman’s is $34, which seems to underscore Wall Street’s confidence.