SAIC posted a fourth quarter loss of over $161 million, or $0.49 per share, and initiated a dividend program with the first payment of $0.12. This announcement highlights two key trends in the government services markets (i) heightened focus on compliance and oversight, and (ii) strategic challenge as how best to deploy capital in a low-to-no growth market environment.
On March 20, General Keith Alexander delivered a statement before the House Committee on Armed Services. The prepared statement highlighted the roll-out of Cyber Support Element (CSE) placements at all six combatant commands to tailor mission support requirements for cyberspace operations. In effect, this testimony confirmed that cyber warfare (aka offense) will be conducted by each of the combatant commands, rather than led by USCYBERCOM or NSA.
This week, USAF Secretary Michael Donley announced that the latest restructuring of the $382 billion program should allow the program to proceed with the “least risk,” a message repeated by the Pentagon’s F-35 program manager, chief weapons buyer and the Air Force acquisition chief at a separate House of Representatives subcommittee hearing.
Mergers and acquisitions activity in the commercial aerospace industry has progressively rebounded from lows experienced in 2009. The cyclical sector was stung by the economic downturn, and deal volume was more than halved, from 107 announced transactions in 2008, to just 52 in 2009. As stability returned to global markets, the industry emerged from the doldrums with noticeable tailwinds.
A Recently proposed plan to combine the administrative and management functions of the military health system under a new Defense Health Agency (“DHA”), currently administered separately by the Army, Navy, and Air Force, may have broader implications than the estimated $50-100 million in cost savings.
Arab Emirates President Tim Clark announced this week that after finding Type 2 cracks in many of its Airbus A380’s wing rib feet, the airline is seeking compensation from Airbus. Mr. Clark stated that the Company is losing roughly $90 million in revenue due to the expected down time required to repair much of its 21 aircraft A380 fleet.
The Satellite 2012 conference, held in Washington, DC the week of March 12, is one of the hallmark events for one of the most dynamic sectors of the defense industry. Favorable growth trends and an evolving contract environment are spurring an active M&A market in the SATCOM space.
For those watching earnings season, one thing was apparent – government services divisions within large defense contractors had another challenging quarter and overall fiscal year.