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Technology Stocks : Defense and Security Investing -- Ignore unavailable to you. Want to Upgrade?

To: hitsoft17 who wrote (23)	2/21/2003 3:07:24 PM
From: lh56	Respond to of 245

Raytheon is a core player in defense sector. Another, smaller idea might be Areoflex (ARXX). Here's the profile page: biz.yahoo.com -larry(yes, another larry)

To: hitsoft17 who wrote (23)	2/21/2003 3:47:02 PM
From: Larry S.	Respond to of 245

we are just getting started here. so you're mentioning it puts it on the list. here is a post from Fidelity about their defense and aerospace select fund and a general commentary on the sector: Why Defense and Aerospace Could Battle Back Fight and Flight Stocks Temporarily Grounded Published: February 21, 2003 By Margaret Malaspina Is it a good time to buy defense and aerospace stocks? One would think that the companies responsible for making airplanes, artillery and other military equipment would get a lift from talk of war in Iraq and a global effort to fight terrorism that could last far into the future. Print article E-mail Article In fact, some of the largest companies in the two industries, including Lockheed Martin, Boeing, Northrop Grumman, and General Dynamics, took off early in 2002. But no sooner had the president signed a $393 billion defense budget—an increase of approximately 19% over the previous year—than defense and aerospace stocks pulled back like an army in retreat. A short-term trend, argues Matthew Fruhan, manager of Fidelity Select Defense & Aerospace Portfolio.1 "I believe the market may have been shortsighted about defense stocks," he says. "By my estimates, it appears that we may be in the middle innings of a defense cycle." Fruhan also points out that if the economy continues to strengthen, the aerospace cycle could begin to turn around as well. Spending and the defense cycle Both defense and aerospace companies are subject to long cycles, and it's possible to see a cyclical turn coming a long way off. For defense stocks, a key indicator of better times ahead is defense spending as a percentage of gross domestic product (GDP): When the defense budget trends higher, defense stocks have historically outperformed the market. And although this year's 19% growth rate is probably unsustainable, even single-digit growth over the next several years could be positive for the industry, says Fruhan. "The trend is what is important, and spending is still trending higher as a percentage of GDP." While the industry is still vulnerable to short-term declines, the likes of which it experienced earlier this year, Fruhan sees new opportunity in the recent downturn. "Business prospects are still solid for defense companies, and now stock valuations are more attractive." What about concerns that the defense industry's pension liability could weaken earnings, which figured into the group's recent decline? Fruhan believes those fears have been overdone. "It's true that these are industrial-type companies with older workforces, and pensions are a big deal. However, because of the way defense contracts are negotiated, most of the cost can be passed on to the Department of Defense." A greater concern for Fruhan, which he thinks some investors have misunderstood, would be an extended war in Iraq. "A short conflict is going to do little to help or hurt the defense budget. But an extended war could hurt the industry to the extent that it draws spending away from procurement. In other words, money that might otherwise be used for an extra plane or ship might be needed to fund the war." The economy and the aerospace cycle While there can be some crossover between defense and aerospace, Fruhan is quick to point out that these are two distinct industries with unique drivers. "Aerospace companies are order driven," says Fruhan. "They rely primarily on the airlines to order new planes." That cycle was on the wane even before the events of September 11, 2001. Since then a sharp decline in air travel has accelerated their woes. Fruhan estimates that orders have fallen by 50% from their peak in 1999 to 2000. What may signal that orders could turn around? "Higher airline prices are a good leading indicator," says Fruhan. "Pricing leads operating earnings, which leads orders. What we'll want to do is make sure we're ready when that order cycle is about to turn. That could potentially happen over the next year or so, and it would make aerospace a much more attractive place to be." Taking advantage of the differences The cyclical differences between the defense and aerospace industries may give Fruhan an edge over the long term. "In managing the portfolio, we have the opportunity to emphasize a non-economically sensitive cycle—defense—when the economy is doing poorly and an economically sensitive cycle—aerospace—when the economy is doing well," says Fruhan. "It's our job to get the cycles right so that we have ongoing exposure to at least one segment of the market with the potential to do well." (Margaret Malaspina is the author of Don't Die Broke and Cracking Your Retirement Nest Egg, both from Bloomberg Press.)

To: hitsoft17 who wrote (23)	2/21/2003 4:01:58 PM
From: c.horn	Respond to of 245

We were waiting for you. :) RESEARCH ALERT-Merrill changes Raytheon forecasts Reuters, 02.05.03, 12:00 PM forbes.com

To: hitsoft17 who wrote (23)	2/22/2003 1:29:28 AM
From: Frederick Langford	Read Replies (1) \| Respond to of 245

RTN - Raytheon Co] Raytheon, Lockheed to share $2 bln bomb contract Chelsea Emery and Jonathan Stempel NEW YORK, Feb 21 (Reuters) - Defense contractors Lockheed Martin Corp. LMT.N> and Raytheon Co. RTN.N> will share a contract worth as much as $2 billion to build laser-guided bomb kits for the Pentagon, the companies said on Friday. The companies will be paid about $281 million in the first year of the contract, with Lockheed receiving $106.6 million and Raytheon the balance, according to Ellen Mitchell, Lockheed's director of communications and public affairs. Lockheed learned of its share on Thursday night, she said [RTN - Raytheon Co] China aims 75 more missiles a year at Taiwan - U.S. WASHINGTON, Feb 20 (Reuters) - China is adding at least 75 ballistic missiles a year to its arsenal and is likely to have fielded 600 against Taiwan by 2005, the Pentagon's Taiwan desk officer said in remarks made public on Thursday. "Taiwan faces the most daunting conventional ballistic missile threat in the world," said Air Force Lt. Col. Mark Stokes, the Pentagon official. Stokes Fred