Industry Week in Review – December 9, 2011
This week, Iranian state television aired footage of an intact U.S. RQ-170 Sentinel UAV that allegedly crashed in Iranian territory. The UAV was part of a stealth reconnaissance mission to map suspected nuclear sites, according to foreign officials. Iranian officials claim to have brought down the aircraft by using cyberwarfare to hack the drone’s electronic system. The effects of the loss could be devastating as there is the potential for reverse engineering of the highly-classified technology. Teal Group analyst Richard Aboulafia claimed that the Iranians will undoubtedly share the technology with other nations, possibly the Russians or Chinese. However, he also noted that the manufacturing know-how to reproduce the aircraft cannot be duplicated from a captured machine.
Boeing and the National Labor Relations Board (NLRB) approved a four-year contract extension under which the union agreed to withdraw allegations that the company built a non-union plant in South Carolina to retaliate against past union strikes in Washington State. The NLRB dropped its high-profile lawsuit against Boeing after the company promised to build the new version of its 737 in Washington.
Big Movers
Smith & Wesson Holding Corporation (Up 28.5%) – Shares are up this week after the company raised its anticipated net sales from continuing operations for fiscal 2012 to between $385.0 million and $395.0 million, which would represent year-over-year growth from continuing operations of between 13% and 15%, up from the prior outlook of 11% to 13% growth. The company now anticipates total gross profit margin for fiscal 2012 to approach 30% and operating expenses to be between 21% and 22% of net sales.
Recent Acquisitions
SAP America to acquire SuccessFactors, Inc., a provider of cloud-based human capital management solutions, for $40 per share, or $3.4 billion. The acquisition will establish an advanced end-to-end offering of cloud and on-premise solutions for managing all relevant business processes. The transaction is expected to close 1Q2012.
Ultra Electronics Holdings, plc acquired Zu Industries, Inc. and Special Operations Technology, Inc. (“SOTECH”), for $77 million and $38 million, respectively. Zu Industries provides equipment for cyber surveillance systems and is expected to create significant synergies between Zu and Ultra’s Information & Power Systems division. SOTECH offers turnkey communications surveillance systems, integrating proprietary and commercial off-the-shelf data analytic tools. The acquisition supports Ultra’s strategy of growth in the transatlantic intelligence and security markets and broadens the Group’s access to the US Government sector
International Business Machines (“IBM”) to acquire DemandTec Inc., a provider of software that analyzes consumer buying patterns for retailers, for $13.20 per share, or an estimated $440 million. The acquisition will enhance IBM’s Smarter Commerce Initiatives. IBM paid roughly 5x 2011 LTM Revenue.
