Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Nyse  >  Northrop Grumman Corporation    NOC

SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets 

Budget deal leaves U.S. defense sector in limbo

share with twitter share with LinkedIn share with facebook
share via e-mail
0
01/03/2013 | 12:02am CET

Pentagon officials and weapons makers on Wednesday expressed relief after Congress approved a two-month delay in huge budget cuts, but warned that a longer-term fiscal solution is urgently needed to lift the uncertainty hanging over the sector.

"Congress has prevented the worst possible outcome by delaying sequestration for two months. Unfortunately, the cloud of sequestration remains," Defense Secretary Leon Panetta said in a statement. "Congress cannot continue to just kick the can down the road."

Votes by Congress on New Year's Day delayed automatic budget cuts known as "sequestration" until March 27, when lawmakers must vote to increase the U.S. debt ceiling.

The 157-page deal reached on Tuesday to avert the "fiscal cliff" delayed $109 billion in U.S. spending cuts - including $54.7 billion due to come out of military spending, but left many larger issues unresolved.

Defense shares were lifted by a rally in the overall market as investors breathed a sigh of relief about the last-minute deal, but some companies' shares lagged the broad market due to continued uncertainty about future military spending.

"Merely delaying sequestration by a couple of months will do little to resolve the uncertainty and chaos surrounding the defense budget," said Todd Harrison, an analyst at the private Center for Strategic and Budgetary Assessments.

Lockheed Martin Corp (>> Lockheed Martin Corporation), the Pentagon's biggest supplier, said it hoped the agreement would help eliminate the need for automatic across-the-board cuts it said would harm government programs and national security.

Until then, "there will be an overhang on our industry that stifles investment in plant, equipment, people, and future research and development essential to the future health of our industry," said Jennifer Whitlow, spokeswoman for the maker of F-35 fighter jets and Aegis missile defense systems.

Lockheed's shares closed 1.1 percent higher on the New York Stock Exchange, trailing 2.5 percent gains for the overall Arca Defense Index <.DFII> and Standard & Poor's 500 Index <.SPX>.

The biggest defense industry trade group, the Aerospace Industries Association, urged lawmakers to work toward a long-term solution.

"If sequestration is not solved in the next 57 days, it would be an abdication of responsibility by the leaders of this country, one that will only heighten Americans' cynicism and cement the public image of a gridlocked Washington that simply doesn't work," said the group's president, Marion Blakey.

Lockheed and other big arms manufacturers including Boeing Co (>> The Boeing Company) and Northrop Grumman Corp (>> Northrop Grumman Corporation) have complained about the difficulty of running their businesses while facing the potential indiscriminate, automatic spending cuts.

Northrop Grumman shares closed 0.9 percent higher on Wednesday while Boeing advanced 2.3 percent. General Dynamics Corp (>> General Dynamics Corporation), which won several large shipbuilding orders last month, closed 2.8 percent higher.

The U.S. unit of Britain's BAE Systems (>> BAE Systems plc) said the uncertainty had "made it virtually impossible to plan near and long-term business decisions" and urged Congress to find a balanced, long-term solution before the March deadline.

The cuts are setting up to be even more painful if lawmakers don't agree on an alternative by March 27, since they would have to be squeezed into a shorter period.

President Barack Obama has excluded uniformed military personnel from being hit by the spending cuts, but some of the department's 800,000 civilians could face up to four weeks of furloughs, or unpaid leave.

If the Pentagon must implement cuts after the March deadline, hundreds of thousands of employees may be forced to take up to a month of leave within just four months, which could create significant disruption of Defense Department operations.

Pentagon spokesman George Little could not specify how many civilians might be furloughed if the cuts were implemented, but he declined to rule out the possibility that virtually all 800,000 might have to take at least some unpaid leave.

"This is not an abstract concept. This is something that will have an impact on real people, doing real work on real missions for this department," Little said.

Loren Thompson, a Virginia-based defense consultant, said the news was not all bad.

He said the last-minute agreement by lawmakers signaled that sequestration cuts were unlikely to ever be implemented as currently planned, although some additional cuts were likely.

"When the chips are down, the two parties can find common ground and that means sequestration is not going to happen the way it is currently mandated," Thompson said. "This is not just a reprieve for the defense industry, it's a signal that the worst aspects of sequestration are never going to occur."

Byron Callan, analyst with Capital Alpha Partners, said an eventual compromise was likely to include some further cuts to defense spending, in addition to $487 billion in cuts already due to be implemented over the next decade.

"Defense spending absolutely will be part of the next debt ceiling/sequestration cliff debates," Callan wrote in a note to investors.

(Additional reporting by Andrea Shalal-Esa; editing by Ros Krasny, Phil Berlowitz and David Gregorio)

By Jim Wolf and David Alexander

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on NORTHROP GRUMMAN CORPORATI
01/20DJCorrection to inauguration donors article on Thursday
01/20 NORTHROP GRUMMAN : MILITARY $8.12 Million Federal Contract Awarded to Northrop G..
01/20 NORTHROP GRUMMAN : Naval Supply Systems Command Weapons Systems Support awarded ..
01/20 EXCLUSIVE : Spirit AeroSystems mulls sending U.S. supply chain jobs overseas
01/19 NORTHROP GRUMMAN : Sponsors Unmanned Aircraft System Challenge to Inspire Young ..
01/19 NORTHROP GRUMMAN : LSP Technologies Sells Laser Bond Inspection System to Northr..
01/19 NORTHROP GRUMMAN : Combine Solicitation - 15 - DOOR ASSEMBLY, FLOOR
01/18 NORTHROP GRUMMAN : Federal Contracts Awarded by Federal Agencies in Massachusett..
01/18 NORTHROP GRUMMAN : Presolicitation Notice - Retainer, Helical
01/18 NORTHROP GRUMMAN : Air Force Life Cycle Management Center awarded $140m contract..
More news
Sector news : Aerospace & Defense - NEC
01/21 Japan Air Commuter takes first ATR in quest for foreign tourists
01/20DJCorrection to inauguration donors article on Thursday
01/20DJRockwell Collins Confident on Jet Ramp -- 2nd Update
01/20DJBOEING : May Face Union Vote at 787 Plant
01/20 Indonesia watchdog says former CEO of airline Garuda a bribery suspect
More sector news : Aerospace & Defense - NEC
News from SeekingAlpha
01/19 Stocks That Should Benefit Under A Trump Administration - Edition 2
01/16 DEFENSE SECTOR UPDATE JANUARY 9-15 : Lockheed Locks In The F-35
01/14 MONTHLY REVIEW OF DIVGRO : December 2016
01/12 Defense secretary nominee Mattis says he backs Lockheed's F-35
01/11 Boeing rated new Underperform at RBC, which says market position inferior
Advertisement
Financials ($)
Sales 2016 24 041 M
EBIT 2016 3 060 M
Net income 2016 2 103 M
Debt 2016 4 746 M
Yield 2016 1,50%
P/E ratio 2016 19,97
P/E ratio 2017 18,99
EV / Sales 2016 1,90x
EV / Sales 2017 1,83x
Capitalization 40 912 M
More Financials
Chart NORTHROP GRUMMAN CORPORATI
Duration : Period :
Northrop Grumman Corporati Technical Analysis Chart | NOC | US6668071029 | 4-Traders
Full-screen chart
Technical analysis trends NORTHROP GRUMMAN ...
Short TermMid-TermLong Term
TrendsBearishBullishBullish
Technical analysis
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 20
Average target price 254 $
Spread / Average Target 9,6%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Wesley G. Bush Chairman, President & Chief Executive Officer
Gloria A. Flach Chief Operating Officer
Kenneth L. Bedingfield Chief Financial Officer & Corporate Vice President
Patrick M. Antkowiak CTO & Corporate Vice President
Donald E. Felsinger Lead Independent Director
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
NORTHROP GRUMMAN CORPO..-0.20%40 912
UNITED TECHNOLOGIES CO..1.07%91 225
LOCKHEED MARTIN CORPOR..3.12%75 509
GENERAL DYNAMICS CORPO..3.26%54 290
AIRBUS GROUP3.98%54 032
RAYTHEON COMPANY3.46%43 140
More Results