How Boeing's Defense Unit Is Bouncing Back [Wall Street Journal]
Summary: Boeing has had problems with its reputation in the defense industry in recent years. Boeing was forced to pay out nearly $500 million to Australia and Turkey because of problems developing surveillance planes; the company was also stripped of a large portion of a classified spy-satellite program and saw its rocket-launch business suffer because of ethical lapses. Earlier this year, the company paid out more than $600 million to settle U.S. criminal and civil investigations of its space and military businesses. However, the company surprised many military and Wall street experts by snatching two prestigious new defense contracts: to lead fence construction for Homeland Security's Mexican-U.S. border fence and from the Air Force's $15 billion helicopter program. Defense contracts represent more than 50% of Boeing's annual revenue.
Related links: Seeking Alpha commentary: Boeing Group Wins Border Contract from Department of Homeland Security • Boeing One-Ups Airbus Yet Again With FedEx Contract • Airbus' Loss in Market Share is Boeing's Gain • Boeing: Get Ready to Fly • Boeing's Earnings Crash As R&D Expenses Soar. Earnings conference call transcripts: Boeing Q3 2006 Earnings Call Transcript • Boeing Q2 2006 Earnings Conference Call Transcript (BA)
Potentially impacted stocks and ETFs: Boeing (BA) • Competitors: Lockheed Martin Corp. (LMT), Northrop Grumman Corp. (NOC), United Technologies Corp. (UTX) • ETFs: iShares Dow Jones US Aerospace & Defense (ITA), PowerShares Aerospace & Defense (PPA)
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