General Dynamics Corporation (GD) received an indefinite delivery, indefinite quantity, single task order contract worth $40 million under the Solutions for the Information Technology Enterprise program to support the Defense Intelligence Agency (DIA).
The contract entails 24×7 supervision of the enterprise service desk (ESD) at the US Army’s Directorate for Information Management. The ESD constitutes of a call center and is responsible for managing mission essential services.
General Dynamics, for its part, would direct any unresolved service desk request to the appropriate support organization and ensure all incidents are promptly recorded in the incident tracking system. General Dynamics will team with other help desks at the customer location to provide a single virtual service desk to the customer community.
General Dynamics will consolidate seven regional service/help desks to two enterprise service desks in the Washington, D.C. area and Colorado Springs, Colorado. Such information technology and data center consolidation would help reduce cost and bring more efficiency to the ESD helping in DIA’s operations.
Work will be performed in Washington, D.C.; Colorado Springs, Colorado; Miami and Tampa, Florida; Honolulu, Hawaii; Stuttgart, Germany; and Molesworth, United Kingdom until the consolidation efforts are complete. The order covers five years, if all options are exercised.
In January this year, General Dynamics announced its fourth quarter and 2010 earnings results. The company generated total revenue of $8.6 billion in the quarter versus the Zacks Consensus Estimate of $8.9 billion. In 2010, total revenue grossed $32.5 billion versus the Zacks Consensus Estimate of $32.8 billion.
General Dynamics’ revenue exposure is spread over a broad portfolio of products and services. Diversification of revenue through exposure to a number of uncorrelated markets will keep the overall growth momentum steady. However, the company’s fortunes are largely tied to the U.S. defense budget, where the threat of budget cuts is looming high.
Also, we have turned slightly cautious about the company’s steadily falling order backlog along with risks related to the execution of key projects. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Based in Falls Church, Virginia, General Dynamics is one of the leading companies in business aviation, information systems and technologies, shipbuilding and marine systems, and land and amphibious combat systems, as well as armaments and munitions. Some of its main competitors are Lockheed Martin Corporation (LMT) and Northrop Grumman Corporation (NOC).
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