Boeing investors fear worst from 737 tragedy 11 Mar 2019 The aerospace giant’s shares lost over $25 bln in value after the second crash of its newest model in six months. That overstates the likely financial impact even if U.S. regulators copy China and ground the plane. The real threat is creating an opening for a Chinese competitor.
Melrose’s latest deal is missing its magic touch 7 Mar 2019 The UK engineer, which swallowed 8 billion pound rival GKN last year, boosted sales and margins without slashing investment. Still, the sluggish car industry could challenge Melrose’s “buy, improve and sell” model. Investors will need to see more evidence of improvement.
Jumbo reality check frees Airbus to fly higher 14 Feb 2019 The European aerospace group will stop making A380s in 2021. Passengers who love the spacious cabins will regret the decision more than the airlines that fly the gas-guzzling behemoth. A focus on nimbler, greener two-engine jets will help narrow Airbus’ valuation gap with Boeing.
Hello concentration, goodbye conglomeration 27 Nov 2018 United Technologies is splitting into three while also closing a deal that creates an aerospace-parts giant. Like DowDuPont and others, activists and a need for competitive heft leave companies little choice – though tariffs and economic concerns stole $96 bln UTC’s show.
$34 bln U.S. defense deal covers all bases but two 15 Oct 2018 The planned combination of Harris and L3 is a real merger of more-or-less equals with little overlap and CEO succession set in advance. The U.S. government even comes off better. Yet for most stakeholders to win, someone must lose. In this case, it’s suppliers and employees.
Elon Musk is even higher on space than cars 12 Sep 2018 Having already captured two-thirds of U.S. rocket launches, the entrepreneur plans a massive boost to SpaceX's capacity. Unlike Tesla, there's no public market pressure. But Musk is gambling the $28 bln firm can slash prices and spur demand for satellite-based internet service.
UK takes space leap as it leaves EU orbit 20 Jul 2018 Exiting the European Union has cast a cloud over Britain’s membership of the Galileo satellite-navigation project. Going it alone could leave the government with a big bill. Building Europe’s first launch pad, though, taps into strong demand for new commercial satellites.
Airbus’ Brexit certainty drive is wishful thinking 22 Jun 2018 The nature of the planemaker’s business means that earmarked transition periods after a UK exit could be too short. But its call for clarity on future arrangements will fall on deaf ears. Even if UK politicians weren’t bungling the process and wanted to help, they can’t.
Rolls-Royce investors wisely keep the seat belt on 15 Jun 2018 The plane engine-maker aims to generate 1 pound of cash per share over the mid-term, quadruple this year’s estimate. Despite the bullish new target, shareholders don’t look to be pricing it in fully. A distant horizon and history of one-off costs explain why.
Rolls-Royce has partial flight plan to destination 14 Jun 2018 The UK engine maker announced plans to cut 4,600 jobs ahead of its investor day in London. The resulting cost savings are welcome. The bigger question for investors is how CEO Warren East can more than double free cash flow in under two years to hit his 1 billion pound target.
Rockwell dabbles in financial overengineering 11 Jun 2018 Paying $1 bln for a non-controlling stake in a rival software company seems odd. PTC doesn’t need the cash. Such shareholdings in peers can have logic, as some drugmakers have shown. The bar is high, though, especially after Rockwell last year turned down a takeover at a premium.
KLX purchase gives Boeing a boost over Airbus 1 May 2018 Paying $4.25 bln for the parts provider lifts the U.S. plane maker’s services arm. It’s the latest bolt-on enabling Boeing to bring more manufacturing in-house and maintain aircraft long after delivery. Yet CEO Dennis Muilenburg still has more to do to reach cruising altitude.
U.S. industrial giants need to be better than good 25 Apr 2018 Boeing shares took off after the $200 bln plane maker beat forecasts and raised its outlook. Rivals with strong earnings that cast even faint doubt on the future, like Northrop Grumman and Lockheed, lost market value. With equities priced for perfection, investors are seeking it.
China brings a gun to its U.S. trade gunfight 4 Apr 2018 Beijing proposed duties on $50 bln of American exports hours after the U.S. said it would tax the same value of Chinese exports. Doing so may hit China’s economy, but that’s the point. The readiness to go toe-to-toe implies Trump’s trade war will be neither good nor easy to win.
Melrose wins battle for GKN, UK M&A may be loser 29 Mar 2018 The takeover specialist's 8 billion pound bid for engineering group GKN has won the day. It now needs a turnaround plan that squares with pledges that were made to placate politicians. And potential bidders for other UK companies know they face a more interventionist government.
Dana keeps GKN defence hopes alive 26 Mar 2018 The U.S. car parts maker raised its cash and shares offer for GKN’s auto unit by $140 million to thwart Melrose’s bid for the whole UK engineering group. The extra cash only compensates for recent falls in Dana’s share price. But given how tight the race is, any increase helps.
Defense M&A fight pits poor David against Goliath 19 Mar 2018 CACI’s $7.2 bln bid for CSRA is 8 pct higher than the agreed deal General Dynamics struck last month. Neither offer stacks up financially, relying instead on rising U.S. defense spending. General Dynamics, though, has deep pockets and is paying all cash. Felling it will be hard.
Melrose shows cool head in battle for GKN 12 Mar 2018 The takeover specialist has raised its cash-and-share offer for the UK engineer by just over a tenth to 7.9 bln pounds. The improved bid may not be enough to compete with GKN’s break-up strategy. But if Melrose prevails, it will do so without undermining its own buyout criteria.
Melrose can afford to hike GKN offer by a tenth 9 Mar 2018 The acquisitive UK engineer must raise its 7 bln pound bid to stand a chance of success. On past deals it has more than doubled its investment in five years. It could pay 10 pct more for GKN and just about clear that hurdle – if growth is robust and performance precise.
Rolls-Royce’s cash engine roars into life 7 Mar 2018 The UK aerospace group churned out 273 mln pounds of free cash in 2017, more than twice what analysts expected. It should do even better this year. Boss Warren East has been understandably stingy with dividends after profit warnings and a bribery scandal. Expect that to change.