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Industry Week in Review – August 26, 2011


More than 40 months after the Boeing 787 Dreamliner was originally slated for delivery to Japan’s All Nippon Airways Co. (“ANA”), U.S and European regulators have awarded regulatory approval for the aircraft to enter commercial service. Originally due in May 2008, ANA will take delivery of the first of its 55 planes on September 26. Despite having to compensate customers for late delivery and running several billion dollars over budget, Boeing has stated that the program remains profitable. Most analysts agree that Boeing will profit from the program, but question when it will break even. Upon delivery of the first aircraft, Boeing will begin releasing its accounting treatment of the 787 program with its quarterly results.

Currently with 827 orders at a price of $185 million per plane, the Dreamliner, made largely from light-weight carbon composites that help lower fuel costs, could change the way aircrafts are manufactured in the future.

Notes on some big movers

HEICO Corp. (Up 23.7%) – Shares are up this week after posting better-than-expected quarterly profits helped by strong results at its flight support group. The company raised its full-year forecast and expects sales and net income in 2011 to grow by 20% and 29%, respectively. The company had previously forecast sales growth of 18% and net income growth of 20%

Oshkosh Corp. (Up 14.2%) – Shares are up this week after many market analysts gave the company “buy” signals. During the past month, shares of the firm were “washed out” and oversold on fears of how government spending cuts would impact the company, but have since rebounded as these fears lessened.

Notes on some relevant transactions

Verizon Communications acquired CloudSwitch, a provider of cloud software technology for an undisclosed amount. The acquisition deepens Verizon’s capabilities in enterprise cloud solutions and is expected to create synergies with Verizon’s IT services subsidiary, Terremark.

Lockheed Martin to acquire QTC Holdings, Inc., a provider of outsourced medical evaluation services to the U.S. government and the U.S. department of Veterans Affairs. The acquisition is expected to expand Lockheed’s Information Systems & Global Solutions business into adjacent health care services markets.  The terms of the deal were not disclosed.

HP to acquire Autonomy Corporation, a leading provider of enterprise information management solutions, for $11.2 billion. As HP continues to reshape its strategic focus away from the PC market, the acquisition is expected to position HP as a leader in software and information services and provide significant leadership in large and growing markets.

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