?>

Is CACI the Future of U.S. Defense Contracting?

by: Matthew Potter
October 28, 2010

Category: BAE Systems, Boeing, Business Line, CACI, Companies, Congress, Department of Defense, Earnings, Events, Federal Budget Process, General Dynamics, ISR, IT, Lockheed Martin, Military Aviation, northrop grumman, Northrop Grumman Corp., Services | RSS 2.0

The big U.S. defense contractors have been announcing earnings for the most recent quarter this week with mixed results. Boeing (BA) and Lockheed Martin (LMT) reported flat or losses but Boeing was buoyed by commercial programs while Northrop Grumman (NOC) and General Dynamics (GD) saw increases. GD is finally seeing an uptick in their executive jet business which helped and Northrop has been pessimistic for the future due to declining defense budgets exploring a sale of their military shipbuilding assets.

CACI (CACI) on the other hand reported a record quarter. Earnings increased twenty percent compared to the year before to $28.7 million. The company projected that for the full year they will make in the $4.00 range per share with an increase in revenue of $0.5 to $2.0 billion.

CACI unlike the big U.S. defense contractors who build large hardware programs as their core business provides intelligence and information technology services to the Defense Department and other parts of the U.S. government. While the Secretary of Defense Robert Gates has begun initiatives to cut back on service contracts these tend to be in the areas of logistic and technical support to the military rather then IT or intelligence which aids CACI.

Many of the big defense contractors have been moving into these fields through acquisitions. Boeing, Lockheed as well as the British defense giant BAE Systems (BAE: LSE) have recently acquired small or mid-size intelligence contractors to improve their exposure. The U.S. and its Allies continue to invest in unmanned assets for ISR missions that will require substantial expansion of their ability to exploit all of the information being collected. This is where CACI and the other defense contractors see growth.

The U.S. defense budget will most likely decline in real terms in the near future. The ship building and aviation investment are already showing signs of being limited to just a few programs but the Pentagon will still need to develop the new technologies that have come to a forefront during the fighting in Iraq and Afghanistan.

As the Pentagon’s investment in large acquisition programs continues to decline expect to see more focus on these areas of defense support.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Tags: , , , , , , , , ,


| Give a Comment | trackback

No Comments

Leave a Reply

You must be logged in to post a comment.

    Like Us On Facebook

  • Search This Site

    Custom Search
  • Upcoming Events

  • FREE Business Downloads

  • Widget Area

    This is widget area, add your widget here from your widget on appereance on your admin panel

>