With all of its financial fortunes, Lockheed is also playing it cool on the acquisition front, even as defense sector analysts anticipate continued consolidation among government contractors. "Company officials remained vague about acquisition plans after the collapse of a deal to buy Titan Corp., of San Diego last month. 'We don't see any significant acquisitions at the forefront' but will continue to consider deals,'" the Post reported, quoting Lockheed's chief financial officer Christopher E. Kubasik.
Times indeed remain good for Lockheed. On Tuesday, the Army awarded the company a contract to build a new spy plane -- an award valued at up to $6 billion. Lockheed beat out rival Northrop Grumman for the contract. The Washington Post had more details: "The unarmed plane, known as the Aerial Common Sensor, will fly 37,000 feet over the battlefield at 400 mph searching for enemy radio and radar signals. The new aircraft will replace two Army planes, Guardrail Common Sensor and Airborne Reconnaissance Low, and the Navy's EP-3E. The initial contract to design and develop the plane is worth about $879 million, but the program is expected to generate billions more once production begins." Federal Computer Week also picked up the news.
Smooth Sailing for Northrop
As for Northrop Grumman, the company may be licking its wounds over the Army spy plane contract, but the Los Angeles-based company is hardly playing the role of sore loser.
The No. 2 government contractor last week reported a healthy rise in profit and sales for its second-quarter. The company's "profit rose 44 percent as it increased work on the U.S. Navy's newest destroyer and boosted sales of missile-defense systems and unmanned spy planes. The company also raised its full-year forecast," the Associated Press reported. Sales grew 11 percent to $7.37 billion. "The success of Northrop's Global Hawk spy plane in Iraq and Afghanistan is leading to more orders. Rising U.S. defense spending is adding funds to Northrop programs to develop the DD(X) destroyer and airborne radar to track cruise missiles, along with missile-defense programs promoted by President Bush. Northrop's profit from ship contracts more than quadrupled in the quarter," the article said.
"We've had strong performance in the quarter, fared well with [federal] appropriations and have significant opportunities going forward," said chief executive Ronald D. Sugar, according to the Los Angeles Times.
As for losing out on the Army spy plane, it's no big deal. "Northrop executives said that the company hadn't done any large-scale hiring in anticipation of winning the contract. Most of the proposed work would have involved the company's Maryland-based electronic systems sector, Northrop spokesman Randy Belote said," according to a report in The Los Angeles Times. "'We would have ramped up if we had been successful with the contract, but we're still in excellent shape,' Belote said. Northrop, with 27,000 employees in Southern California, makes the B-2 'Spirit' stealth bomber and a range of Navy warships."
Blue Skies for Boeing
Boeing, the No. 4 federal contractor, reported last week that its fiscal third quarter saw a rise in net income and a 3 percent revenue climb.
The Chicago-based company said it recorded "a better-than-expected $607 million profit for the second quarter and raised its earnings estimates for the rest of this year and next, buoyed in part by an improving outlook for the long-stagnant commercial airplane business. The nation's largest aerospace company, continuing to ride out the commercial aviation slump thanks to a thriving defense business, said it expects to deliver more jets in 2005 than previously forecast," the Associated Press said. "Net income for the April-through-June period amounted to 75 cents a share, compared with a loss of $192 million, or 24 cents a share, for the same period a year earlier, when results were dominated by a $1.1 billion charge reflecting the problems in its satellite and launch businesses."
The Wall Street Journal had more: "Boeing's increasingly optimistic overall projections -- despite a series of ethical scandals that have hurt its reputation and stripped it of $1 billion in defense orders -- show the combined benefits of cost cutting, success in obtaining new military programs and what President and Chief Executive Harry Stonecipher said is 'an increased interest in ordering new airplanes from many airlines." While "we don't see any big surge in orders.'"
Choppy Seas for EDS
Back to EDS, the No. 8 contractor. Last week, the company reported a profit of $270 million for its second-quarter, up from $88 million in the year-ago quarter; revenue rose 4 percent. One of the biggest challenges facing the company is its multi-billion-dollar contract to build the Navy-Marine Corps Intranet, and on that note there was some positive news this week. On Wednesday, the company announced changes in the NMCI contract. According to the Associated Press, the "Navy will let the company shift some of its old network-based applications, such as server management, security, storage and hardware and software support to a new Web-based system. EDS spokesman Kevin Clarke said the change would save money by reducing the number of older, so-called legacy communications networks that EDS must support."