Team Infidel
Forum Spin Doctor
Washington Post
January 27, 2008
Pg. F7
By Stephen Manning, Associated Press
Global markets may be writhing and the U.S. economy teetering at the brink of recession, but for many of the nation's largest defense firms, the good times keep going.
Most have posted big earnings gains in recent years, largely because of record Pentagon spending on weapons programs and the wars in Iraq and Afghanistan. And with the government, not consumers, as their biggest customers, defense contractors appear poised to weather any economic downturn that may lie ahead.
"We are about as far removed from the credit risk and those sorts of matters as you can imagine," said Bruce L. Tanner, chief financial officer at Lockheed Martin of Bethesda. "We feel sort of insulated."
The benefits of that relative safety are also showing up on their balance sheets.
Lockheed, which makes fighter jets and is the world's largest defense contractor, reported a 10 percent increase in fourth-quarter profit Thursday and boosted its 2008 per share outlook by 10 cents. Ship builder Northrop Grumman's net fourth-quarter earnings were flat Thursday, but the Los Angeles company had record quarterly revenue and forecast earnings growth in 2008.
On Wednesday, General Dynamics of Falls Church, which makes a range of military products, including bullets and armored vehicles, reported a 42 percent increase in fourth-quarter earnings. The company said it has not seen any shortfalls in orders in its private jet unit, the one segment of its business that could be vulnerable to any reductions in corporate spending during a downturn.
Analyst Paul Nisbet of JSA Research of Newport, R.I., said defense firms are meeting or exceeding Wall Street earnings predictions, and said the sector will likely continue to be strong as long as defense spending remains high.
"It is a pillar of stability compared to the turbulent markets in other industries," he said.
January 27, 2008
Pg. F7
By Stephen Manning, Associated Press
Global markets may be writhing and the U.S. economy teetering at the brink of recession, but for many of the nation's largest defense firms, the good times keep going.
Most have posted big earnings gains in recent years, largely because of record Pentagon spending on weapons programs and the wars in Iraq and Afghanistan. And with the government, not consumers, as their biggest customers, defense contractors appear poised to weather any economic downturn that may lie ahead.
"We are about as far removed from the credit risk and those sorts of matters as you can imagine," said Bruce L. Tanner, chief financial officer at Lockheed Martin of Bethesda. "We feel sort of insulated."
The benefits of that relative safety are also showing up on their balance sheets.
Lockheed, which makes fighter jets and is the world's largest defense contractor, reported a 10 percent increase in fourth-quarter profit Thursday and boosted its 2008 per share outlook by 10 cents. Ship builder Northrop Grumman's net fourth-quarter earnings were flat Thursday, but the Los Angeles company had record quarterly revenue and forecast earnings growth in 2008.
On Wednesday, General Dynamics of Falls Church, which makes a range of military products, including bullets and armored vehicles, reported a 42 percent increase in fourth-quarter earnings. The company said it has not seen any shortfalls in orders in its private jet unit, the one segment of its business that could be vulnerable to any reductions in corporate spending during a downturn.
Analyst Paul Nisbet of JSA Research of Newport, R.I., said defense firms are meeting or exceeding Wall Street earnings predictions, and said the sector will likely continue to be strong as long as defense spending remains high.
"It is a pillar of stability compared to the turbulent markets in other industries," he said.