Tag: Aerospace and Defense

Credit Suisse’s Robert Spingarn

Analyst: Robert Spingarn

Firm: Credit Suisse

Industry: Aerospace-Defense

Rank: 1

Robert Spingarn, aerospace and defense analyst at Credit Suisse (nyse: CS – news – people ), ranks first among all his peers on Wall Street in Forbes.com’s 2008 survey of America’s best stock analysts. Spingarn earns the award with solid judgment, as measured by our data partner Zacks Investment Research, in both forecasting earnings and picking stocks over a three-year period.

In the latter category, Spingarn benefited especially from bullish calls on BE Aerospace (nasdaq: BEAV – news – people ), Precision Castparts (nyse: PCP – news – people ) and Armor Holdings (nyse: AH – news – people ). From mid-May 2005, when Spingarn put positive ratings on the stocks, through the end of 2007, each clocked triple-digit gains. Click here for more on the methodology underlying our rankings.

Full story at Forbes.com

CEO Pay: Defense Bosses Cash In

Washington, D.C. – As part of our annual survey of chief executive pay at America’s 500 biggest companies, we took a closer look at aerospace and defense. For the last few years, the sector has jumped on robust defense budgets and a rebounding commercial aerospace market.

In that time, compensation for the leaders of America’s largest aerospace and defense concerns has also ballooned. Take the six in the first of the accompanying tables. Their stocks delivered a 30% annualized total return during the companies’ last three fiscal years. By our tally, total compensation for those companies’ chief executives increased an average 50% annualized during that period.

In Pictures: Aerospace Pay Flying High
For 2007, the average total compensation among aerospace and defense companies in our annual salary survey was $20.6 million, vs. an average $12.8 million for all 500 companies surveyed. The median figure, or midpoint in the range, for the nine aerospace and defense companies in our survey was $14.6 million, vs. a median of $6.5 million for all 500 chief executives in our print rankings.

Full story at Forbes.com

Beltway Tech Stocks: Bottom’s Up?

Washington, D.C. – Working from BB&T Capital Markets’ northern Virginia office, stock analyst Michael Lewis has spent the last six years building up a network of government and defense contacts.

“I tell investors that, at the end of the day, it doesn’t matter what our ratings are, what our price targets are,” says Lewis. “Our value proposition to the investment community is what we’re hearing at the Pentagon and on [Capitol] Hill.”

At an event hosted last week by the National Defense Industrial Association, a trade group, Lewis heard from high-level budget personnel at the U.S. Army, Air Force, Navy and Marine Corps about their 2009 priorities. One conclusion Lewis drew from the event: Funding threats to information technology projects, which have dogged several big tech services stocks, may be diminishing.

Lewis tells us that none of the military’s budgeters on the panel explicitly said cuts to information technology projects were off the table, but at the same event a year ago, there was talk of scaling back on technology in favor of immediate concerns (like fighting two wars). Not this year.

“[Information technology] wasn’t even brought up,” says Lewis. “That was very surprising.”

Full story at Forbes.com

Day & Zimmermann: Mission Possible

Harold Yoh has been chief executive for 10 years at Day & Zimmermann, a closely held engineering and construction concern. He admits he still occasionally struggles to describe his work.

“The cocktail party question of ‘What do you do?’ isn’t the easiest one to answer,” he jokes.

A quick glance at Day & Zimmermann’s business description reveals why. The 107-year-old outfit, headquartered in Philadelphia and ranked 317th on our annual list of America’s largest privately held companies, provides services as varied as storing 600,000 tons of ammunition, providing temp staffing of technology workers and maintaining nuclear power plants.

But one thing Yoh, 47, doesn’t labor to explain is recent sales growth. Revenues in 2007 were $1.9 billion, up a robust 36% from $1.4 billion in 2006. This year, Yoh indicates, Day & Zimmermann should make it well past the $2 billion mark. Day’s business mix seems to be working, however difficult it is to explain at cocktail parties.

Full story at Forbes.com

As The Aerospace And Defense Cycle Turns

Washington, D.C. – With third-quarter earnings season winding down, we checked in with Alex P. Hamilton, defense and aerospace analyst at New York brokerage Jesup & Lamont Securities, on his outlook and picks in two areas with very different prospects: makers of airplane equipment, and companies specializing in government technology services.

We’ll start where the bulls are running now. “Commercial aerospace has been great,” Hamilton says. “The end markets are awesome.”

Hamilton explains that the commercial aerospace business tends to have five good years followed by five bad ones. He pegs 2004 as the start of the current upswing, meaning it should run until 2009. Factor in the rollout of two jets– Boeing’s (nyse: BA – news – people ) 787 and Airbus’ A380–and the consensus thinking has the good times lasting to 2011.

As we’ve observed on occasion this year, aerospace equipment stocks have climbed along with expectations. The upward price movement gives even a bull like Hamilton pause.

“At the beginning of the cycle it was value investors,” he muses, “Now it’s momentum guys.” Also troubling are high fuel prices, the possibility that tightening credit could lead to an economic slowdown and production delays for both the 787 and A380.

The latter item doesn’t especially bother Hamilton. The delays have raised concerns, he suggests, and could dampen cash flow among certain suppliers. But they’re unlikely to sink the jet programs altogether, and they’re not enough to undo the broader aerospace recovery. “It might change the trajectory of it,” he says, “but that’s it.”

Full story at Forbes.com

Sensors, Spooks And Titanium

As with all Forbes company lists, our 2007 list of the 100 Best Mid-Cap Stocks In America has its share of outfits that should interest investors or others looking at Washington, D.C., from a business perspective. The table below lists seven.

Bargain hunters, don’t get too excited. These companies hail from the defense and aerospace sector, which has enjoyed a terrific run over the past four years. Thus, the stocks look expensive relative to valuation history and, with two exceptions, projected growth rates.

That will not stop us, however, from sticking our necks out and tagging a couple of these stocks as attractive.

Full story at Forbes.com

Transformer

Washington, D.C. – Terry M. Ryan has made a career of getting big Beltway organizations through moments of change.

In 1991, after 10 years in the U.S. military, he was hired by the Senate Select Committee on Intelligence to advise it on adjusting to a post-Cold War world. Later, he helped set up a new Department of Defense office aimed at rejiggering airborne reconnaissance to use more unmanned aircraft. When he went to the private sector in the mid-’90s, he took the top job at defense engineering concern Adroit Systems. In three years, he presided over a tripling in Adroit’s sales, to $43 million, and its acquisition by SRA International in 2003.

Now a senior vice president at Mercury Computer Systems (nasdaq: MRCY – news – people ), Ryan, 48, must pull another rabbit out of the hat. Headquartered in Chelmsford, Mass., Mercury makes systems for processing high-volume data. Among its specialties: software that can convert big data sets into 3-D images, and systems that pull together information from different kinds of computer chips (digital signal processors, graphics processors and so on). Just under half the company’s $224 million in fiscal 2007 sales came from defense customers, primarily big contractors like Lockheed Martin (nyse: LMT – news – people ), Northrop Grumman (nyse: NOC – news – people ), and Raytheon (nyse: RTN – news – people ).

Yet despite those companies’ booming fortunes, Mercury’s own defense business sagged 15% for the year ended in June, a decline the company blamed in part on federal funding shifting to “more immediate” needs. (Translation: Iraq.)

Full story at Forbes.com

Tiny Battery, Big Biz

Washington, D.C. – In early 2008, Littleton, Colo.’s Infinite Power Solutions plans to begin high-volume production of batteries not much bigger than postage stamps. Like players before kickoff, execs at Infinite, now 25 employees strong, are in full chest-pounding mode.

“Our flexible, rechargeable, thin-film batteries will boldly go where no batteries have gone before,” says Timothy Bradow, Infinite’s vice president for marketing and business development.

Key to the boldness: the defense and intelligence market. Bradow and Chief Executive Raymond Johnson believe certain federal customers will pay $50 to $100 per battery. They and their investors have maneuvered to get Infinite up and running with a surge of public sector demand.

So what’s a thin-film battery? Batteries, or devices that convert chemical energy to electrical energy, are essentially three items: a positive electrode, a negative electrode and an electrolyte that separates the two. In the lithium-ion batteries that power cellphones and laptops, the electrolyte is a liquid or a polymer gel.

Thin-film batteries, by contrast, use a glassy, inorganic solid for an electrolyte. The technology was pioneered in the 1970s at Stanford University, developed subsequently by the Department of Energy at its Oak Ridge National Laboratory, then released for commercial use starting in the 1990s.

Full story at Forbes.com

Savvy Savi Thrives Within Lockheed

Washington, D.C. – Savi Technology, an 18-year-old Mountain View, Calif., developer of systems to track cargo and other assets using radio frequency identification (RFID) technology, has had so many corporate parents that you almost need one of its chips to track it.

A year ago, Lockheed Martin (nyse: LMT – news – people ) bought the then-private Savi for a reported $400 million. And as Savi co-founder Vikram Verma, who now runs the Savi Group within Lockheed, tells it, the unit seems to have finally found a good home.

At the time of the June 2006 acquisition, Savi had 300 employees and $80 million in revenues. In contrast, Lockheed, a government contracting behemoth headquartered in Bethesda, Md., has 140,000 employees and $39.6 billion in sales.

That raised the possibility that Savi might get lost within Lockheed, as it had in other big corporations. But Savi has brought Lockheed veterans into its operation to both boost its government contracting expertise (its first big defense win was a contract worth $70 million in 1994) and, frankly, to raise its stature within the Lockheed organization, Verma says.

It seems to have worked. At a recent Sanford Bernstein conference, Lockheed Chief Robert Stevens singled out Savi and its business as one of Lockheed’s most promising areas of opportunity for the next five years.

Full story at Forbes.com