On a miserable day for the market, shares of Oshkosh
Two years ago, Oshkosh investors thrilled to the news that their company had beaten the big boys again. Fresh from an upset victory over Navistar
A bid too low
Winning FMTV, you see, required Oshkosh to beat its competitors on price. The company did underbid incumbent military truckbuilder BAE by 30%. But just as we saw with Boeing
Likewise, it seems a bid originally designed to win Oshkosh only "less profit" than BAE had been making will actually turn into a money-loser. Oshkosh recently warned that it'll probably have to take a charge against earnings for the losses it's racking up on FMTV. On the one hand, the truck's costing more to build than anticipated. On the other, a suddenly skimpy Pentagon is declining to pay extra for upgraded options that Oshkosh had hoped to hawk.
Bad news and worse news
The net result of all this is negative profit margins on the $3 billion contract for Oshkosh -- and it gets worse. Today, Oshkosh is only halfway through its five-year project. Far from boosting Oshkosh's bottom line, FMTV could remain a drag on its profits for years to come.
Can Oshkosh find a way to turn a profit on this turkey? Add the stock to your Fool Watchlist and find out.