Northrop Grumman Scores $33.9m Contract
Michael Bowler | RSS | 7 Comments
Southwest and NWA runway traffic at Maryland’s BWI Airport
Northrop Grumman, a company that we discussed a few weeks ago as a hiring possibility is now in even better shape. They scored a contract, signed, sealed, and delivered, with the Federal Aviation Administration’s Air Traffic Organization-Terminal that can be worth as much as $33.9 million.
The nationally expanded Northrop Grumman Co. is the fourth largest defense contractor in the world and the largest naval supply company. They were founded in Denver, Colorado in 1927 under the name Grumman. Upon a 1994 merger with competitor Northrup, the name Northrop Grumman was acquired.
Northrop Grumman has several locations in all sorts of sectors all across America, most notably in Mobile, Alabama, all throughout Texas, California, their Newport News, Virginia shipyard, and the electronic systems headquarters in Maryland, nearby Columbia, the heart of the Maryland economy.
Northrop Grumman is one of four companies selected to receive a contract to provide program management and financial support to the FAA. The total contract negotiations are worth $137.8 million. Northrop Grumman was given a contract for one base year with up to three, one-year options worth a total of $33.9 million if all goes right. Northrop Grumman’s Information Systems sector is in charge of planning, execution, implementation, cost, and financial support to the FAA.
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Tags: electronic systems, northrup grumman, information systems sector
Michael Bowler | Thu, Jun 11 2009
Actually, Hiro, I think it will do a lot as far as the stock price and the economy. They were down quite a large chunk of change due to the economy for a while. Their stock had gone down like everyone else’s. I think you will see their stock rise. It is not all about solid revenue. It’s about market confidence. This will raise confidence levels. Also, this is a huge bag of money we’re talking about. This contract is potentially going to represent a tenth of their productivity. I don’t know about you, but ten percent of my money feels like a lot of money. Besides, getting a $33.9m contract in this economy is huge.
I looked into Northrop Grumman’s trading history. Before the recession really hit, they tended to flirt with 70. Around Christmas 2008 and March 2009, they were flirting with 35. They have equalized at around 48. Yesterday, the first day of trading after news broke, they had spikes at opening, just after noon, and ended high at closing. It has the appearance of mixed feelings in the market. Give it a couple weeks. Northrop Grumman’s stocks will be one of the market leaders as the economy rebounds and will be one of the stronger stocks, especially in their related industries.
Trust me, the CEOs went to Hollywood Hills and had a party over this. Their stocks will rise ahead of the market, helping to escalate the value of their related industries. Also related to the rest of the economy, they will inevitably begin hiring in order to staff this new contract properly, creating more jobs. This is a wonderful thing for the entire economy.
“Managing your boss,” I don’t think it’s so late that you need to begin regretting anything. If you want to dump Airbus for NG, it’s not too late. The other option is to shell out a few more bucks to get into NG if you have them. The options are many and the end is not yet nigh. Try to grab them between 1pm and 3pm, when the trend drops down a little for the day, at some point over the next few weeks and you should be fine. Just keep an eye on NOC on your ticker to make sure you haven’t missed the uptrend.
Hiro | Wed, Jun 10 2009
That sounds good for NG but given they’re revenue is pretty solid already, is this really going to affect much as far as stock price? It hasn’t done much the last 5 days
Steve | Thu, Jun 11 2009
This contract shows Northrop Grunman’s good position in the market and this may help the company’s shares to go up!
Fab | Thu, Jun 11 2009
That’s a pain! I had a choice between investing in Airbus or NG and I chose Airbus. Wish I’d taken the other path now!
Michael Bowler | Fri, Jun 12 2009
Great points, and I don’t disagree with you. I think if things are that volatile and the market does retreat, this deal will keep NG in better shape than most and on top of the market, wherever that market takes us.
However, one of the reasons this deal excites me is that it begins to circulate money (or the promise thereof) and more deals made create more deals. If nobody has told you yet, Hiro, I am here to tell you: the recession is almost over. That’s why these deals excite me so. The market will not retreat unless investors continue being stupid. You’re right though, the market has been fueled by misplaced emotions, speculation, and unrealistic fear lately. As confidence builds again, I promise the market will too.
However, you mentioned we had the biggest rally in history. That is true, and it concerns me slightly. Our recession hit a false bottom. I’m afraid that people will get too excited and we will hit a false rally. I’d like to see a slow, steady rally as we rebuild a firm foundation under it, instead of just setting up another rollercoaster ride.
Hiro | Thu, Jun 11 2009
That’s a good point Michael. Personally though I think the recent lifts are primarily derived from the overall life in the market. I mean we’ve had one of the biggest rally in the stock market’s history since 1933. This news will clearly help with the juice but ultimately, when the stock market starts to retreat (if it does), I’m willing to bet it’ll take this one down with the rest.
Right now, this market has turned into one gigantic session of volatility. We’ve seen VIX at levels never seen before. The market movement is impacted more by speculation, fear, and other emotions more than ever. That’s why I think even though this deal is huge, it won’t help the company’s stock price if the overall market takes a hit.
Frank | Mon, Sep 14 2009
How were share prices affected?