In an effort to extend its footprint in the logistics command and control business The Boeing Company (BA) has signed an agreement to acquire CDM Technologies. The transaction is expected to close by the end of the fourth quarter of 2010.
San Luis Obispo, California-based privately held firm CDM Technologies is a software engineering company that specializes in real-time transportation and logistics planning systems for the U.S. military. CDM Technologies’ logistics optimization software enables the U.S. Army to efficiently move people and assets around the world.
Boeing’s wholly-owned San Diego based subsidiary Tapestry Solutions will fully integrate CDM Technologies’ employees and capabilities into its existing business.
Tapestry Solutions focuses on Boeing’s Logistics Command and Control subdivision of Defense & Government Services, an operating division of Boeing Defense, Space & Security business segment. It provides custom software development, system engineering, geographic information systems, field support, training, consulting, support services and modeling and simulation to the U.S. military, other government customers and the private sector.
Boeing’s Defense, Space & Security is one of the world’s largest defense, space and security businesses, specializing in innovative and capabilities-driven customer solutions, and also a manufacturer of military aircraft.
In the recently reported third quarter of 2010, Boeing’s Defense, Space & Security segment witnessed a 6% drop in quarterly revenues to $8.2 billion. This was due to lower volume from fewer deliveries, less favorable mix on the C-17 program, and lower volume on Brigade Combat Team Modernization (BCTM) and Ground-based Midcourse Defense (GMD) programs. Segmental backlog was $65.6 billion, approximately two times the segment’s projected fiscal 2010 revenues.
Boeing has a unique position as the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries, and as one of the largest aerospace and defense contractors in the world. Also, its revenue exposure is spread across more than 90 countries around the globe.
However, in the near-term, headwinds over 787 delays — along with expected cutbacks in the U.S. Defense budget — looms large over the fortunes of Boeing, similar to its large-cap defense prime peers — Lockheed Martin Corporation (LMT) and Northrop Grumman Corporation (NOC). We are Neutral for the time being on Boeing, currently retaining a Zacks #3 Rank (short-term Hold rating).
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