Industry Week in Review – October 28, 2011
Over the past few months there has been a softening of demand in the $60 billion global air-freight market. According to Teal group analyst Richard Aboulafia, cargo numbers over the past three months “look an awful lot like a double dip,” and typically represent an “advanced warning of things going down.” One of these warnings was seen this week when Boeing had to push back its delivery of 747-8 freighters due to a three week dispute with Cargolux Airlines International.
To keep its customers from jumping ship, Boeing has begun cutting deals as jittery airlines seize on the chance to curb their exposure to a slump. Cathay Pacific, the world’s largest international air cargo carrier, was assuaged with concessions on a previous order of eight 777’s in order to keep its order of ten 747-8s. The delay in delivery and small decline in air-freight markets clearly fall short of the buyer rebellion and supply bottlenecks that forced Airbus to suspend plans for a freight version of its A-380. But, these disturbances come at a time when Boeing is trying to focus its attention on building more than 800 carbon fiber 787 Dreamliners, rather than deal with customer disputes.
Big Movers
Unisys Corporation, (Up 42.8%) – Shares are up this week after the company reported third quarter net income from continuing operations of $1.63 per share compared to the consensus estimate of $0.77. The company claimed growth in its non-U.S. Federal IT outsourcing business, while higher sales in industry solutions offset a decline in its U.S. Federal business.
Ceradyne Inc., (Up 21.1%) – Shares are up this week after the company reported strong financial results in 3Q2011 as compared to the same time period last year. Sales and net income were $148.0 million and $20.4 million this quarter compared to the same quarter last year’s $91.8 million and $4.5 million, respectively.
VSE Corporation, (Down 13.4%) – Shares are down this week as the company announced 3Q2011 sales of $159.9 million down from same quarter last year sales of $212.9 million. Net income and EPS fell this quarter as well, from $7.2 million and $1.39 in 3Q2010 to $6.1 million and $1.17 in 3Q2011, respectively.
Relevant Acquisitions
ManTech International to acquire Worldwide Information Network Systems, Inc. (WINS), a provider of global support and IT services to the Department of Defense, Department of State, and other agencies for $90 million. The acquisition will enable ManTech to deliver IT services through WINS’ prime position on the Defense Intelligence Agency’s Solutions for Information Technology Enterprises (SITE) contract, an indefinite delivery / indefinite quantity contract vehicle with a $6.6 billion ceiling and a period of performance through 2015. KippsDeSanto acted as the sole financial advisor to WINS.
Oracle to acquire RightNow Technologies, a provider of cloud-based customer experience software products and services for $1.5 billion. The acquisition adds customer experience capabilities to help companies interact with and provide a consistent experience to customers across channels.
