March Cyber Intelligence Review

/in /by

March was a busy month in the Cyber / Intel arena with some newsworthy market developments, and a handful of notable acquisitions and VC funding transactions taking place.

In the federal arena, General Keith Alexander, Director, NSA and Commander of CYBERCOM spoke to the House Committee on Armed Services Subcommittee on Emerging Threats and Capabilities.  General Alexander addressed key cyber threats and challenges facing our nation, as well as the country’s approach to offensive cyber operations.

On the M&A / VC funding front, security and cloud computing remain top priorities, with Dell’s acquisition of once-public SonicWall for over $1 billion, and AMD’s purchase of SeaMicro for $334 million leading the way.

Click here to review the Cyber / Intelligence monthly post.

 

Industry Week in Review – April 6, 2012

/in /by

Following the recent International Society of Transport Aircraft Trading (“Istat”) conference and this week’s Engine MRO Forum put on by Aviation Week, debate over the surging demand for new jets and whether Boeing and Airbus are producing too many new narrow body plans has begun to escalate. 

In 2011 Airbus and Boeing received more than 2,200 net orders, nearly double the level in 2010 and well beyond the 1,011 jets they delivered.  Subsequently, the two airframers are sitting on backlogs equivalent to about seven years of output. And, production increases underway will soon have Airbus and Boeing completing 42 A320 and 737 narrow body jets a month, respectively, by 2014, with aims to go higher

The debate revolves around whether surging demand for new jets will fall flat and leave the market flooded with an oversupply of new jets. Skeptics question how many small and struggling airlines can expect to take delivery of the planes they have ordered. India’s Kingfisher Airlines, for example, currently on the edge of collapse, has ordered dozens of Airbus A320s, A330s and A350s.

Additionally, demand for relatively young, used jets appears to be stuck in low gear. The lack of demand for these planes is forcing owners to park jets sooner than anticipated, flooding the market with used engines and depressing prices. Three years ago Rolls-Royce leased individual engines for Boeing and Airbus narrow body jets for $120,000 a month.

Today, these engines can only command $50,000 a month. Republicans and lessors, alike, are pointing at the government’s export banks, complaining that their loan guarantees are enabling Tier III buyers to purchase new jets rather than taking used models. Guarantees of financing for aircraft purchases hit a record $11 billion last year.

Big Movers

CPI Aerostructures Inc. (Up 10.3%) – Shares rose this week after CPI was upgraded to “Buy” from “Hold,” with a price target of $17 per share. CPI was rated “hold” on March 19th this year, when the stock was trading at $15.80 per share.

AAR Corp. (Down 8.0%) – Shares fell this week following AAR’s downgrade from an “outperform” rating to a “neutral” rating. Analysts at Wedbush wrote, “the most recent quarter showed that weakness in the airlift business is likely to continue into fiscal 2013, further increasing concerns about the longer-term opportunity in the airlift segment and the broader defense segment sales as troop levels in Afghanistan are expected to decline substantially and OCO funding is increasingly pressured.”

Relevant Transactions

Acentia acquired 2020 Company, LLC, a premier professional services firm that delivers business and technology solutions through consulting and outsourcing services to the government, in the areas of health, education, and science. The acquisition, whose terms were not disclosed, extends Acentia’s reach with the services and expertise to pursue and execute more and even larger opportunities on programs of national significance. KippsDeSanto & Co. acted as exclusive financial advisor to 2020 in this transaction.

CPR Aerospace to acquire Wood Group Turbopower, LLC, a provider of overhaul and repair services to military operations, commuter airlines, business aviation, and utility freight markets in the U.S. and internationally, for a total consideration of $18.7 million. Wood Group PLC had discontinued the Turbopower business a few years ago and has reported the company as discontinued in its financial statements.

Cobham acquired additional 23% of Thrane & Thrane, a manufacturer of equipment and systems for mobile communication based on satellite and radio technology worldwide. Cobham made the deal soon after it withdrew on offer to buy Thrane & Thrane for $73.73 per share following Thrane & Thrane’s board announcement that it “felt unable to recommend Cobham’s purchase proposal.” Cobham now owns approximately 25.6% of the Company.

Click here to review comparable company analysis.

Industry Week in Review – March 30, 2012

/in /by

A new Pentagon report, released on March 29th, projects a nearly $17 billion increase (vs. prior estimates) in the total cost of the F-35 Joint Strike Fighter program.  The report estimates the total program cost to $396 billion, representing 2,443 aircraft for the USAF, USMC, and U.S. Navy. 

However, production of the aircraft is still anticipated to be slowed per the 2013 budget; a total of 179 aircraft were removed from the procurement roadmap between 2013 and 2017, while $6.2 billion was added in near-term for procurement and development costs.  Full production ramp-up is projected to be reached by 2018, at which point the Navy and USMC anticipate to be receiving aircraft at a 50 unit-per year rate; the USAF anticipates being at a 60 jet-per year rate in 2018, growing to 80-per year by 2021.

In other news this week, Army General Keith Alexander, National Security Agency (“NSA”) and U.S. Cyber Command (“CYBERCOM”) chief, briefed the House Armed Services emerging threats and capabilities subcommittee on a revised cybersecurity strategy for the future.  Remarking that “our capabilities represent key components of deterrence,” Alexander plans to distribute offensive weapons typically wielded by centralized agencies to the individual combatant commands, allowing for rapid action and the coupling of traditional kinetic attacks with cyber threats. 

Currently, only the U.S. Central Command and Pacific Commands have a fully operational cyber element.  “Our goal is to ensure that a commander with a mission to execute has a full suite of cyber-assisted options from which to choose, and that he can understand what effects they will produce for him,” Alexander wrote.

Big Movers

QinetiQ Group plc. (Up 11.1%) – Shares rose this week on a report that the company has signed an agreement with the trustees of its UK defined benefit pension scheme for the triennial actuarial funding valuation and other measures designed to reduce the funding deficit and improve the scheme’s security; the actuarial impact of the index change is estimated to be a deficit reduction of ~€109 million.  Moreover, company officials recently reaffirmed their view on meeting their projected financial performance for the fiscal year ended March 31, 2012.

Finmeccanica SpA (Up 15.6%) – Shares rose this week after the company reported FY2012 guidance in line with analysts’ estimates.  The Company expects to report revenues between €16.9 billion and €17.3 billion, as well as adjusted EBITA of approximately €1.1 billion.

Tyco International Ltd. (Up 6.3%) – Shares rose this week after the company announced a definitive agreement to combine its Flow Control business with Pentair, a diversified industrial manufacturing company with a significant Water & Fluid solutions business unit, in a tax-free, all-stock merger.  The transaction values Tyco’s Flow unit at approximately $4.9 billion; Tyco shareholders will own approximately 52.5% of the combined entity.

Relevant Transactions

Air Industries Group, Inc. acquires Nassau Tool Works Inc., a manufacturer of aerospace components, including sub-assemblies and complete landing gear systems, for private and public entities, including the USAF and U.S. Navy.  Air Industries, a manufacturer of precision components, will leverage the acquisition to augment its landing gear manufacturing operations, growing this practice to over 40% of the broader business.  The combined entity is expected to have earned 2011 revenues and EBITDA of over $68 million and approximately $10 million, respectively.  Terms of the deal were undisclosed.

Aveshka, Inc. acquires Civitas Group’s Government Services Practice, a provider of homeland security and private sector preparedness solutions for the DHS, DoD, and IC.  The acquisition adds policy consulting and strategic advisement credentials to Aveshka’s suite of analytic, cybersecurity, and IT capabilities.  The combined business will be able to provide holistic solutions for national security requirements – from policy to strategy to implementation.  Terms of the deal were undisclosed.

Click here to review comparable company analysis.

 

Industry Week in Review – March 23, 2012

/in /by

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. Lockheed Martin is building three variants of the radar-evading supersonic warplane for the military and eight countries that are helping to fund its development. Navy Admiral David Venlet, program manager for the F-35, told reporters after the House hearing that he was in close touch with the eight partner countries, plus Israel and Japan, and while some might scale back or delay their purchase of planes, none had said anything about withdrawing from the program completely. Nonetheless, Donley maintained that any further cost growth would cut the total number of planes bought. The Pentagon’s fiscal 2013 budget proposed postponing production of 179 F-35 planes to save $15.1 billion over the next five years, as the military begins to implement $487 billion in spending cuts over the next decade.

Big Movers

Smith & Wesson Holding Corp. (Up 15.6%) – Shares rose this week after the gun maker hiked its full-year sales forecast on a higher order backlog, reflecting strong demand for its guns and rifles. The company, which competes with Sturm Ruger & Co, Glock Inc and Taurus, reported a 168.9% surge in firearm backlog in the third quarter. In addition to the rise in demand was a strong third quarter performance, with revenue and up 23.8% YoY and net income at $5.4 million compared to a net loss of $2.7 million in the previous year.

AAR, Corp. (Down 13.4%) – Shares fell upon news that plane shortages and higher costs led to poor performance at two of its businesses. This is expected to persist into the 4th quarter so that improvement is expected only in early next fiscal. The company on Wednesday blamed unscheduled maintenance inspections and delayed receipt of aircraft, as well as higher maintenance costs for the poor performance at its airlift operations business. Also, AAR said it experienced higher-than-expected start-up costs and cost overruns on certain programs at its precision machining business.

Relevant Transactions

HEICO Corporation’s Electronic Technologies acquires Ramona Research, Inc., a designer and manufacturer of RF and microwave amplifiers, transmitters and receivers primarily used to support military communications on unmanned aerial systems (“UAS”), other aircraft, helicopters and ground-based data/communications systems. The acquisition is expected to improve HEICO’s position on growing UAS programs and to accretive to its earnings per share within the year following the purchase. Terms of the deal were not disclosed.

API Technologies to acquires C-MAC Aerospace, a portfolio company of Francisco Partners and Shah Capital Partners, for a total purchase price of 20.95 million pounds sterling (approximately $33 million USD). C-MAC is a leading provider of high-reliability electronic systems, modules, and components to the defense, aerospace, space, industrial, and energy sectors. The company brings to API a large portfolio of proprietary and differentiating products along with an increased European and international presence. The offer value for the transaction was approximately 0.93x C-MAC’s FY 2011 revenue of 22.5 million pounds sterling (approximately $36 million USD).

Click here to review comparable company analysis.

Industry Week in Review – March 16, 2012

/in /by

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 company estimated the cost to repair all of its A380s to be around €105 million ($137 million) in total.

These costs do not include the efforts for permanent redesign of the affected wing parts or take into account any potential compensation claims from customers. Mr. Clark has publicly announced “we are not happy… we are losing customers.” Of the other airlines that have encountered this problem, Arab Emirates is the largest operator of A380s and is currently the only airline to publicly demand compensation from Airbus.

Also this week, the U.S. Navy announced that it expects cost growth on its new nuclear aircraft carrier, Gerald R. Ford, to continue. In 2008 Congress capped the acquisition cost of the ship at $11.76 billion, however, the government accountability office has warned that if additional costs remain uncontrolled, they could reach as much as $1 billion above Congress’ current cap. As the lead ship of its class, the Gerald R. Ford will have a new hull, aircraft launch system, recovery system, electrical system, and propulsion system.

Originally the Navy had planned to build three ships, but in 2002 former defense secretary Donald Rumsfeld made the decision that only one would be built. Much of the additional cost likely stems from combining all new technology development costs into one ship, as well as only 30% of the ship design completed when the contract was originally signed in 2008. The Navy is now forced to ask Congress for permission to pay the higher-than-planned-for bills.

Big Movers

Federal Signal Corp. (Up 33.0%) – Shares rose this week after the Company reported a narrower net loss of $16.6 million in its fourth quarter, compared to a year earlier loss of $169.2 million. Additionally, revenue rose 20% to $223.3 million from $186.7 million a year earlier.

GeoEye, Inc. (Up 20.4%) – Despite fourth quarter net income sliding to $14.1 million from $15.2 million the same quarter last year, shares rose this week after the Company reported this quarter’s revenue up 17% to $96.8 million from $82.5 million. These results beat analysts’ estimates of $89.9 million. Going forward, the Company estimates earnings from $1.95 to $2.35 per share on revenue of $355 million to $375 million. These estimates beat analysts’ revenue earnings per share target of $2.25 on revenue of $364.0 million.

Relevant Transactions

Levine Leichtman Capital (“LLCP”) acquires Tronair, Inc., a manufacturer of aircraft ground support equipment, special items for building aircraft, replacement parts, and technical support services, for an undisclosed amount. The acquisition is expected to further strengthen Tronair’s market position and fuel its next stage of growth through LLCP’s long history of offering a value-added partner to its portfolio companies and ability to leverage its strategic, financial, and M&A expertise.

Flextronics International Ltd. to acquire Stellar Microelectronics, Inc., a provider of electronics manufacturing services including, product development, turnkey manufacturing, and service and repair for the medical, military, space, and wireless markets. This transaction will provide Stellar’s customers increased global scale and expanded supply chain leverage, along with the benefits of an increased, low cost global footprint. Terms of the deal were not disclosed.

Click here to review comparable company analysis.

Industry Week in Review – March 9, 2012

/in /by

With the backdrop of across-the-board budget pressures and a tightening procurement environment, DoD officials this past week commented that U.S. defense contractors that survived the Pentagon’s 2013 budget proposal should fare well in subsequent years, with the assumption that sequestration does not go into effect.  “We’re going to continue to think through our situation and make adjustments and so forth as we go forward because this is a slow process of making a very major transition,” remarked Defense Secretary Ashton Carter.  Rep. Adam Smith (D-Washington), the ranking Democrat on the House Armed Services Committee, remarked, “I think that the likely scenario is that the tax cuts expire, sequestration doesn’t happen, and we go into January fighting.”  Officials also highlighted the ever-apparent need to increase investment in several strategic areas, including cybersecurity and electronic warfare.

In related news, the Pentagon’s sharpened focus on reducing expenditures continues to manifest itself in one of the DoD’s highest-priority programs, the F-35.  Given the demands within the 2013 budget proposal to slow the jet’s production by removing 179 aircraft over the next five years, procurement officials are currently in negotiation with prime contractor Lockheed Martin for a lower price on the fifth batch of 30 low-rate, initial production (“LRIP”) aircraft. 

Despite the apparent pull-back, the Air Force continues to voice support for the Joint Strike Fighter, with USAF chief of staff Gen. Norton Schwartz commenting that it is “the future of tactical aviation for the Air Force.”  The Pentagon anticipates continued cost revisions for the F-35 program; the Pentagon’s last official estimate pegged development and production costs nearing $380 billion for more than 2,800 U.S. and international aircraft.

Big Movers

Smith and Wesson Holding Corporation (Up 35.5%) – Shares rose this week after the company reported net sales from continuing operations for 3Q of $98.1 million, reflecting a 23.8% increase over 3Q of last year.  The company’s gross margins also grew in 3Q year-over-year (“YoY”), rising from 24.5% to 30.6%, driven by increased sales volume and absorption due to higher production levels, as well as completion of the consolidation of its Thompson / Center Arms business.

John Bean Technologies Corporation (Down 11.0%) – Shares fell this week after the Company reported 4Q results and missed analyst estimates at both the revenue and earnings-per-share (“EPS”) levels.  The Company reported 4Q revenues of $271.5 million, missing analyst estimates of $287.0 million and reflecting a 5.3% contraction from 4Q of last year.  Additionally, the Company reported Non-GAAP EPS of $0.25, missing the consensus estimate of $0.53 and reflecting a 56% decline YoY.

Ducommun Inc. (Down 9.1%) – Shares fell this week after the Company reported a slight revenue miss relative to analyst estimates ($188 million versus $195 million) and substantially lower-than-expected operating margins in its Ducommun Aerostructures business (4.9% vs. 8.5%).  However, the Company did post a record backlog of $636 million, and reported that its integration of LaBarge was “effectively complete.”

Relevant Transactions

Plasan Sasa Ltd. acquired Artis LLC, a provider of contract research and development (“R&D”) and analysis services for health, military, and security markets.  The Company’s analysis services focus on defining the military utility of future technologies, especially distributed sensor networks and robotics systems.  Plasan expects the acquisition to enhance its ability to provide superior survivability solutions against current and future threats, leveraging Artis’ leading Iron Curtain Active Protection System (“APS”) products.  Terms of the deal were not disclosed; SC&H Capital served as the exclusive financial advisor to Artis LLC.

A group of private investors, including Weinberg & Bell Group, has acquired AeroRepair and Hemico.  AeroRepair provides services in the repair and overhaul of brake assemblies, wheel assemblies and landing gear for regional airlines, corporate airlines and military aircraft, while Hemico manufactures and distributes aircraft parts.  TD Bank and Huntington Capital provided financing for the transaction.

Click here to review comparable company analysis.

Industry Week in Review – March 2, 2012

/in /by

This week, the U.S. Air Force announced that it has begun reducing the number of bases at which it plans to eventually house the new F-35. This is being done in an effort to reduce the estimated life-cycle cost of the single-engine stealthy fighter.

Last year, the Pentagon disclosed an estimated more than $1 trillion to operate the fighter for the next 50 years, raising significant concern from customers, including the U.S. Navy and Air Force. Since then, the services have been working to refine their plans to operate the jet in hopes of curbing operations and sustainment (O&S) cost.

Air Force Chief of Staff Gen. Norton Schwartz says the original cost estimate contained more than 40 operating locations for the F-35A, and “We are pressing down on that. We are in the low 30s now.” Schwartz adds that the initial cost estimate is “of limited value” because it projected so far out into the future – 50 years. Typical cost estimates of this type span fewer years, he notes. Fewer operating locations could dovetail with the service’s request to conduct new rounds of base closures with a hope of reducing as much as 20% of excess infrastructure being operated by the Air Force.

Big Movers

OSI Systems, Inc. (Up 10.2%) – Shares rose this week after the company announced that Mexico’s tax and customs authority has exercised options under its pact that bring the total value of the six-year turnkey screening services agreement to about $900 million. The specialized electronics and services provider had previously announced the minimum obligated value of $400 million for the program.

VSE Corp. (Down 11.4%) – Shares fell this week after the company fourth-quarter revenue of $148.9 million, down 29.9% from $212.4 million in the same quarter a year ago. For the year, revenue was down 28.6% to $618.6 million, while earnings fell 13.2% to $20.6 million. VSE blames lower fourth-quarter and full-year revenue on the expiration of a large U.S. Army contract, delays in other government contract awards and delays caused by protests of contract awards.

DigitalGlobe, Inc. (Down 21.3%) – Shares fell this week after the company reported a fourth quarter net loss of $27 million, or 58 cents per diluted share. The loss compares to a $600,000 profit the company reported in the fourth quarter of 2010. During the past fiscal year, which ended December 31, DigitalGlobe reported a net loss of $28.1 million, or 61 cents per diluted share. In 2010, the company reported a net income of $2.5 million, or 5 cents per diluted share.

Relevant Transactions

RLJ Equity Partners acquired LAI International, a portfolio company of Spell Capital Partners. LAI International is a contract manufacturer, offering precision-engineered finished parts, components, and subassemblies for aerospace, power generation, defense, medical, electronics, and other technology industries. The deal was funded by a $37.1 million unitranche facility and an equity co-investment provided by Monroe Capital.

Click here to review comparable company analysis.

Industry Week in Review – February 24, 2012

/in /by

AerCap Holdings NV, which own 350 planes and is the third largest global leasing company in the world, issued a warning this week that Airbus and Boeing are building too many planes. Both Boeing and Airbus are boosting output by about 40% over the next two years, citing demand from emerging markets and the need for developed-nation carriers to replace their aging fleets.

However, Aengus Kelly, chief executive of AerCap Holdings, believes that “clearly there is a vast amount of over-ordering.” In reference to Lion Air of Indonesia, Kelly asked, “is it realistic that a small airline in Indonesia is the largest customer of the world’s largest exporter?” Lion Air’s order for 230 planes, at list prices, is valued at $22.4 billion.

Although executives of both suppliers and airlines are rationalizing the record orders seen over the past 12 months by soaring domestic and regional demand in Europe and Asia, Aengus Kelly doubts whether some big deals, such as Lion Air’s, will ever be realized in full.

Big Movers

Finmeccanica SpA (Up 5.3%) – Shares rose this week after the company announced its objective to sell assets worth roughly €1 billion ($1.3 billion) with an intent to strengthen its financial structure.

Dynamics Research Corp. (Down 15.7%) – Shares fell this week after the company announce FY2012 expected earnings per share (“EPS”) to be in the range of $1.06 to $1.14, and revenue and EBITDA to be in the range of $353 to $363 million and $37 to $39 million, respectively. Analysts had been expecting FY2012 EPS of $1.41 and revenue and EBITDA of $399 million and $45 million, respectively.

Relevant Transactions

NetStar-1, a portfolio company of Lake Capital, has merged with Whitney, Bradley and Brown Inc., a management consulting firm focused on business transformation, organizational realignment, and process improvement. The combined company will operate under the Whitney, Bradley and Brown name and will have over $130 million in revenue. KippsDeSanto & Co. acted as financial advisor to Whitney, Bradley and Brown in this merger. Terms of the deal were not disclosed.

Salient Federal Solutions, Inc. to acquire ATS Corporation, a provider of software and systems development, systems integration, and IT infrastructure and outsourcing primarily to government agencies in the United States, for $3.20 per share or around $73 million. Salient expects to build on ATSC’s offerings and relationships and help them address the many immediate customer requirements for delivery of rapid solutions

Logistics Management Institute acquired Belzo, Inc., a provider of IT project management and logistics services, for an undisclosed amount. The acquisition is expected to expand LMI’s Southeast Region presence.

Dell Inc. acquired AppAssure Software Inc., a developer of backup and replication software for Windows Server, Hyper-V, VMware, and Microsoft Exchange, among others. The acquisition will allow Dell customers to modernize their data protection strategies and keep up with the pace of their organization. Terms of the deal were not disclosed.

Click here to review comparable company analysis.

Industry Week in Review – February 17, 2012

/in /by

This week President Obama released the Budget for Fiscal Year 2013. In it the Department of Defense has requested a total of $613.9 billion – $525.4 billion for base discretionary spending and $88.5 billion for Overseas Contingency Operation (“OCO”) spending. In all, the Pentagon’s 2013 budget outlines the elimination of $259 billion over the next five years, which is in line with the Budget Control Act of 2011’s requirement of $487 billion in defense cuts over the next decade.

According to the budget proposal, the Pentagon has stated that $75 billion will be saved over the next five years by reorganizing its investment strategy. A large portion of these cuts, $15.1 billion, will come from reorganizing the Joint Strike Fighter program, with another $13.1 billion from reducing the Navy’s shipbuilding plans. Overall the Pentagon has requested $179 billion in 2013 to buy and develop aircraft, ships, vehicles, missiles, and satellites.

Specifically, the 2013 budget requests breakdown for military services are:

  • $136.6 billion for the Army – about $700 million more than appropriated in 2012
  • $155.9 billion for the Navy – about $900 million less than appropriated in 2012
  • $140.1 billion for the Air Force – about $4.8 billion less than appropriated in 2012
  • $94.9 billion for defense-wide issues – about that same as was appropriated in 2012

Big Movers

Finmeccanica SpA (Up 17.7%) – Shares are up this week amid investor speculation that euro-area officials are nearing an agreement on a Greek bailout deal, as well as the announcement that the company’s subsidiary Telespazio signed contracts worth about €112 million ($147 million). All of the contracts signed support various space operations.

Mine Safety Appliances Co. (Up 6.1%) – Shares rose this week after the company announced record net sales in the fourth quarter and full year. MSA earned $0.46 a share on net sales of $303.7 million, compared to $0.32 a share on $285 million a year ago.

Ceradyne, Inc. (Down 4.3%) – Shares declined this week after the company reported 4Q2011 earnings per share of $0.56, $0.05 below analysts’ estimates of $0.61. Revenue for the quarter also came in below estimates at $128.5 million, versus the consensus of $131.9 million.

 Click here to review comparable company analysis.

 

Industry Week in Review – February 10, 2012

/in /by

This week, Europe’s air safety authority (“EASA”) ordered checks to the entire global fleet of Airbus A380 after cracks were found in some of the planes’ so-called “wing rib feet” – the metal brackets that connect the wing’s ribs to its skin. The order extends a previous order for nearly a third of the planes to be inspected. Airbus has announced that they have developed repair kits for the problem and that, despite the cracks, the aircraft are safe to fly. Still EASA has said that “this condition, if not detected and corrected, could potentially affect the structural integrity of the airplane.” Currently 68 planes are flying with seven airlines. The agency has given airlines between four days to six weeks to complete checks on the A380 aircraft.

Also this week, India selected Dassault Aviation as the preferred bidder for a 126 fighter jet deal. The award was determined largely on the 25% cheaper price tag, compared to the Eurofighter Typhoon jet, which would have cost five billion dollars more than Dassault’s Rafale fighter. In April of last year India pulled a surprise move, cutting out Boeing and Lockheed Martin from the procurement process, as well as Saab AB and Russia’s makers of the MiG-35. Now as the biennial 2012 Singapore Airshow, among the world’s top three aviation events, kicks off February 14th, attention is on the Eurofighter and Boeing. If these planes lose in South Korea and Malaysia, as they have in India and Japan, questions will be raised as to the future of these planes in the international market.

Big Movers

TransDigm Group Incorporated (Up 7.8%) – Shares rose this week after the company raised its FY2012 guidance. Sales are expected to be in the range of $1.47 billion to $1.51 billion, up from $1.43 billion to $1.47 billion. EBITDA is now expected between $723 million to $743 million, compared to $705 million to $725 million previously

Aeroflex Holding Corp. (Down 11.9%) – Shares are down this week after the company posted 2Q2012 sales of $171.1 million compared to $181.6 million the same quarter last year. Additionally, net income fell to $12.6 million or $0.15 per share from $14.3 million or $.19 per share last year.

iRobot Corporation (Down 31.7%) – Shares fell this week after the company announced that it expects to report first quarter earnings per share (“EPS”) between a loss of $0.08 and break-even. Consensus estimates for EPS were $0.30 and $1.45.

Click here to review comparable company analysis.