This doesn't seem good to me...how about you? WSJ:Northrop Grumman To Consolidate Gulf Shipbuilding Operations -UPDATE:
• JULY 13, 2010, 8:36 P.M. ET
By Doug Cameron Of DOW JONES NEWSWIRES
Northrop Grumman Corp. (NOC), one of the largest contractors to the U.S. Navy, said Tuesday it would close one of its seven shipbuilding yards and may sell or spin-off the entire naval business.
The move comes in the wake of the Navy's new 30-year fleet plan and broader Pentagon spending cuts and a shift in military priorities towards smaller, more nimble weapons platforms. Northrop is the Pentagon's third-largest supplier, with key roles in the navy's aircraft carrier and submarine programs, as well as destroyers and amphibious assault ships.
"Recognizing our company's long-term strategic priorities, we foresee little synergy between shipbuilding and our other businesses," said chief executive Wes Bush in a statement.
The U.S. defense group hired advisors to review a business previously seen as core after being expanded through acquisition at the start of the decade. It has hired Credit Suisse to lead the review of the naval business, the smallest of its five business units, which accounted for 15% of the group's $33 billion sales last year. Perella Weinberg Partners is also advising Northrop.
It has 40,000 staff at seven main yards, and is a key employer in Virginia, Mississippi and Louisiana, with sales of $6.2 billion last year.
The company will take a $113 million charge in the second quarter against the closure of its Avondale yard near New Orleans, and plans to move all work on amphibious vessels to its existing facility at Pascagoula, Miss. It also expects "substantial" further restructuring costs from the move.
The charge and a previously-announced $296 million tax benefit are together expected to boost second-quarter earnings by 73 cents. Northrop Grumman shares were up 1.5%, at $56.10 in after-hours trade.
Northrop predicted shipbuilding sales would be flat, at $6 billion for the next few years, and Bush has cautioned shareholders.
The naval arm has lower margins than its aerospace and information arms, where products include the B-2 bomber, unmanned aircraft and radar systems. Northrop sold its advisory business for $1.65 billion last year and also pulled out of a bid to supply the US Air Force with aerial refueling tankers after judging it couldn't make a profit on the contract award.
-By Doug Cameron, Dow Jones Newswires; 312-731-6910; doug.cameron@dowjones.com
LB's link of June 2010 on Aircraft Carriers and Support Ships....
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