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Lockheed Martin's New Laser Gun: 1; Toasted Truck: 0

By Rich Smith - Mar 15, 2015 at 9:13AM

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Lockheed Martin could be first to market with a revolutionary laser gun for the U.S. Army.

By now, you've probably heard all about Lockheed Martin's ( LMT 0.64% ) 21st century laser gun -- the one that killed a truck last month.

Lockheed's laser gun: 1; truck: 0. Photo source: Lockheed Martin.

But here's what you may not have heard: Lockheed's new laser gun is small enough that it can be carried around on a truck itself.

The news at 11
Multiple media outlets covered the "Lockheed laser gun" story last week. Basically, it went like this: Using a new system that combines laser beams from several fiber-optic cables into a single, incredibly powerful beam, Lockheed shot an idling Ford F-150 truck in the hood, burning a hole clear through its engine and rendering the truck inoperable. The laser blast lasted only a few seconds, yet neutralized its target from more than a mile away.

That's the news in a nutshell. It's fun to read about, in a Star Wars-fanboy kind of way. But here at The Motley Fool, what we're really interested in learning is how high-tech advances such as Lockheed Martin's new laser gun have the potential to light up your portfolio. So here's why this news is important to Lockheed investors.

What Lockheed's new laser means to investors
Lockheed calls its new laser gun ATHENA -- the "Advanced Test High Energy Asset" -- and it's related to at least four other Lockheed laser programs that we know about:

  • ALADIN (Accelerated Laser Demonstration Initiative), a 30-kilowatt fiber laser.
  • ADAM  (Area Defense Anti-Munitions), a laser weapon system Lockheed Martin has tested in shooting down small "sea-based and airborne targets."
  • ABC (Aero-Adaptive/Aero-Optic Beam Control), a Defense Advanced Research Projects Agency-funded project to improve the accuracy of laser guns fired from mobile platforms such as fighter jets.
  • HEL MD (High Energy Laser Mobile Demonstrator), a U.S. Army program to develop a 60-kilowatt spectrally combined high-power fiber laser capable of tracking and detonating incoming rockets, artillery, and mortars (C-RAM); shooting down hostile unmanned aerial vehicles in the air; and also detonating unexploded ordnance (including IEDs) on the ground.

Before there was ATHENA, there was ADAM -- a laser test in which Lockheed torched a rubber dinghy. Photo: Lockheed Martin.

It's this last program -- HEL MD -- that ATHENA seems aimed at fulfilling. As we revealed one year ago, Lockheed won the $25 million HEL MD contract from the Army with the aim of delivering a working prototype 60-kilowatt fiber-optic laser by Dec. 27, 2016. With the company's 30-kilowatt ATHENA laser now a success, it appears Lockheed is halfway to its goal. In less than half the time allotted for completion, Lockheed has already fielded the most powerful military-grade prototype fiber laser in the world.

How much could a win here be worth to Lockheed? It's hard to say at this early date. Lockheed Martin earns an 11.8% operating margin on its revenue, according to S&P Capital IQ data. What we don't know is how large the market opportunity for laser guns might ultimately become. (The HEL MD contract, for example, pays Lockheed only $25 million to build the first prototype.)

But given the military's obvious enthusiasm for this kind of weapon -- encapsulated in Chief of Naval Research Rear Adm. Matthew Klunder's frequent mentions that the Navy's new Laser Weapon System costs only about "one dollar" to shoot, it seems likely that whoever builds a big enough, powerful enough, and small-enough laser gun first will have a very large market opportunity. 

Granted, Lockheed is not alone in this race. Boeing  and Raytheon both have powerful competing products targeting the military market. But these were last clocked at 10 kilowatts and 25 kilowatts, respectively. For the time being at least, Lockheed has the lead.

All that remains now is for Lockheed Martin to ramp up the power of its ATHENA laser by twofold, and keep the entire laser gun small enough to install aboard a Heavy Expanded Mobility Tactical Truck. At that point, it should have at least one of the Pentagon's major laser weapons contracts in the bag.

Did you know Lockheed Martin has been building and testing laser guns for the U.S. military since at least as far back as 2007? Photo source: Wikimedia Commons.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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