Lockheed Bucks Economic Trend; Politics of War Drive Business

The Washington Times (Washington, DC), December 25, 2007 | Go to article overview
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Lockheed Bucks Economic Trend; Politics of War Drive Business


Byline: Tom Ramstack, THE WASHINGTON TIMES

Lockheed Martin Corp.'s bid for a $2.4 billion contract to supply F-16 jet fighters to Morocco illustrates how the company's defense business can continue to grow even while the U.S. economy slows.

The Bethesda-based company is the world's largest maker of military weaponry.

Shares of its stock have risen 19 percent in the past six months. By comparison, the Dow Jones Industrial Average has fallen about 1 percent in the same period.

The difference is that while the profits of most large companies are tied to consumer spending habits, Lockheed Martin's are tied to the politics of war.

"Politics are dominant, more so than the economics or the technology," said Paul H. Nisbet, an industry analyst for the financial firm JSA Research. "[The defense industry] is and always has been and always will be a political football. The government is not strictly run on a business basis."

When the United States went on a war footing, Lockheed Martin's business outlook improved. If the next president cuts back on defense spending, Lockheed Martin's bottom line would suffer, Mr. Nisbet said.

Last week, Lockheed Martin announced that it won an $849 million Navy contract to produce and deploy the Trident II D5 Fleet Ballistic Missile in fiscal 2008.

About 2,400 of the company's 140,000 employees work on the Trident missile program.

Other deals the company announced last week include a $96.7 million contract with NASA to provide lightning imaging technology for a weather satellite, a $44 million contract with the Latvian army to supply two air surveillance radar systems and an acquisition of PercepTek Inc., a Colorado company that produces software to control unmanned military vehicles.

Its top-of-the line products include its military aircraft, such as the F-22 and the new F-35s it is developing, industry analysts say.

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