Pity the military-industrial complex.
After decades of mergers and acquisitions, many of our nation's most successful defense contractors are coming up against a problem with a capital "PR": They're so big that even their good news may not qualify as "news" anymore. For example, look at a few headlines from the defense industry earlier this week:
(NYSE:RTN)received a $2 million order to build Paveway II laser-guided bomb kits.
(NYSE:NOC)got $7 million to provide "non-personal services for the Defense Intelligence Agency IT network."
Yawn. I'm sorry, but when your company starts weighing in at market caps that are multiples of $10 billion, seven-figure contracts just get no respect.
How big is big?
No, for a real heavyweight to "make news," nothing less than nine figures qualifies these days. Luckily for General Dynamics
Read the fine print
Good to know? Sure, but here at the Fool, we don't just report news -- we aim to teach you how to interpret it. And when dealing with defense contractors, there's one key fact you need to identify alongside the headline-grabbing (or not) revenue number: the timeline. Rarely does a contract begin generating revenues on the day it's awarded. Often, the revenues take months to arrive.
In General Dynamics' case, the timeline runs as follows: The $800 million-plus in potential tank-related revenues is expected to begin arriving in mid-2008, and should run through mid-2010. The bulk of the work, and the revenues, appear likely to arrive in 2009. Just a word to the Foolish.
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