Industry Week in Review – July 11, 2014

Aerospace & Defense Update

Boeing released its Current Market Outlook this week for 2014 through 2023, identifying several important trends in the aerospace market over the 20-year forecast period.  Most notable among these is a 3.2% growth in global GDP, driving passenger and cargo plane traffic growth 5.0% and 4.7% annually, respectively.  These projections lead to long-term demand for 36,770 new airplanes valued at $5.2 trillion, with 70% of those aircraft characterized as single-aisle jets.  Geographically, Asia Pacific, North America, and Europe have the largest growth projections, expecting to add 13,460; 7,550; and 7,450 aircraft to their fleets by 2033, respectively.  Of the 36,770 planes being added, 42% are planned to replace aging aircraft while 58% contribute to overall growth of the global fleet.

Additionally, Boeing has finalized a deal with Emirates Airlines to deliver 150 777X wide-body jets, a deal worth $56 billion.  The 777X  is a new generation aircraft expected to go into production in 2017 with first delivery scheduled for 2020.  The deal grants Emirates the option to purchase an additional 50 aircraft, adding $19 billion in value if exercised.  This news comes as a blow to rival Airbus, particularly on the heels of Emirates’ cancellation of an order for 70 of Airbus’ A350 aircraft for $16 billion last month.

Government Technology Solutions Update

The Army released plans for a five-year, $250 million indefinite-delivery, indefinite-quantity contract developing and supporting Intelligence, Surveillance, and Reconnaissance technologies for the Army Research Laboratory Sensors and Electron Devices Directorate, with a focus on enhancing the directorate’s capabilities in persistent surveillance and open source intelligence.  The draft request for proposal outlines several functionalities, including operational support, engineering and design, and integration services.  Task orders under the contract will include work related to sensors, cloud computing, multi-source data fusion, and signal processing.

The General Services Administration (“GSA”) is considering a new category for cloud computing services in its IT Schedule 70 program.  The new Special Item Number would simplify cloud computing service purchases, and provide agencies with greater access to consolidated services.  The GSA issued a Request for Information on July 10th seeking to gain a better understanding of how companies currently sell cloud computing services, specifically as it relates to pricing and data migration requirements.

Big Movers

API Technologies Corporation (Down 15.1%) – Shares were down this week after the Company announced disappointing fiscal first half results, posting a net loss of $17.1 million.  The Company reported earnings per share of ($0.27), greatly missing consensus estimates of ($0.01).

Relevant Transactions

Vista Equity Partners acquired Social Solutions, Inc., a provider of performance management software solutions for federal, state, and local government agencies in the United States and Canada. Terms of the deal were not disclosed.

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