* Dividends, sharebuys "important," CEO says
* Continued focus on cost-cutting
* CEO happy with portfolio mix
By Andrea Shalal-Esa
April 24 (Reuters) - General Dynamics Corp reported slightly higher first-quarter earnings on Wednesday, far exceeding analysts' forecasts, but revenue fell short of expectations.
The maker of tanks, ships and Gulfstream jets reported net earnings of $571 million, or $1.62 per share, up from $564 million or $1.57 per share, a year earlier.
The largely upbeat report drove the company's shares nearly 5 percent higher in morning trading, with the stock trading $3.23 higher at $70.38.
Joe Nadol at JP Morgan said the market's concerns ahead of the results now appeared to have been "overdone" and the sales miss was more than offset by better operating margins.
Revenues dipped to $7.4 billion from $7.58 billion.
Analysts polled by Thomson Reuters I/B/E/S had forecast earnings of $528 million, or $1.50 per share, on revenue of $7.55 billion.
Operating margins edged up to 11.4 percent from 11.3 percent a year earlier, the company said.
Chief Executive Phebe Novakovic, who has carried out a series of management changes since taking over on Jan. 1, said the company was focused on operations, cost improvement and cash generation.
"Going after overhead is critical to margin expansion in the down environment," Novakovic told an analysts call, noting that cost-cutting efforts would also make the company's products more competitive.
"So you ... better believe that we're going to be very, very focused on taking costs out and we've done it. And we'll continue to do it," she said.
She said General Dynamics would continue to reduce its workforce as needed in the current budget environment but declined to forecast any specific areas targeted for layoffs.
Novakovic also underscored the company's commitment to dividend increases and "shareholder-friendly" share buybacks.
General Dynamics increased its quarterly dividend payment by 10 percent to 56 cents a share in March, a trend she called "important." It repurchased 1 million shares in the first quarter and still had authorization to buy back over 9 million more shares, she said.
Novakovic said the company also needed to strengthen its balance sheet "a touch" after charges in the fourth quarter, with no acquisitions on the near-term horizon.
Novakovic called the first-quarter results "a strong start toward achieving our objectives for the year."
She said the Gulfstream business was expected to grow significantly over the longer term, while the company's marine group would see expanded submarine sales. Margins would remain a key focus area for the information services sector, while international orders should help combat systems bridge to more robust U.S. Army spending in future years.
"In general, I like ... the offsetting cyclicality we have embedded and in all respects, we see a clear way forward," she said.
General Dynamics' backlog at the end of the quarter was $48.5 billion, down from $55.2 billion a year earlier.
The company said the estimated value of various unfunded contracts and options that have not been exercised was $25.2 billion.