As part of Increment 2 of the B-2 extremely high frequency (EHF) satellite communications program, Northrop Grumman Corporation (NOC) received a $372 million contract from the U.S. Air Force to design the advanced electronically scanned array (AESA) antenna system.
Under the terms of contract, the company will complete the preliminary design of the AESA antenna system, demonstrate technology readiness and prove its functionality using hardware prototypes. The new antenna system will increase the B-2 Spirit stealth bomber’s speed of sending and receiving battlefield information securely by satellite by up to 100 times than it can do so currently.
Increment 1 includes enhancements to the aircraft's processing and communications infrastructure. Increment 2 involves installation of a new communications terminal and the AESA antenna. Increment 3 will integrate the B-2 into the U.S. Department of Defense's Global Information Grid. The increment 3 EHF Satcom program is part of an ongoing effort by the Air Force and Northrop Grumman to keep the B-2 mission up to date against evolving enemy threats.
B-2 is the flagship of the nation's long range strike arsenal and one of the world's most survivable aircraft. Northrop Grumman is the Air Force's prime contractor for the B-2. Increment 2 is the largest effort ever undertaken to augment the lethality of the B-2 weapon system.
The engineering design, manufacturing, assembly, integration and test activities for Increment 2 will take place at company facilities in Palmdale, El Segundo and Redondo Beach, California; Dayton, Ohio and Tinker Air Force Base, Oklahoma.
In April this year, Northrop Grumman Corporation reported impressive first quarter 2011 adjusted earnings of $1.67 per share compared with the Zacks Consensus Estimate of $1.55 for the quarter. Sales for the reported quarter however decreased 2.6% to $6.73 billion, from $6.91 billion in the year-ago quarter, and were 5.6% lower than the Zacks Consensus Estimate of $7.13 billion.
Northrop Grumman recently separated its Shipbuilding segment through a spin-off. The new company is named Huntington Ingalls Industries Inc. (HII). The business unit had suffered from a slowdown in shipbuilding contracts with increasing competition from rivals.
Post spin-off, Northrop has a strong program portfolio, which is positioned to take advantage of growth in the defense space and is supported by favorable projected revenue from diversified streams.
The positives are nevertheless tempered by apprehensions regarding defense cutbacks on high-cost platform programs, over-exposure to the Department of Defense (DoD) budget, lower backlog, cost over-runs and substantial exposure to missile-defense-related programs. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Los Angeles-based Northrop Grumman Corporation is the third largest defense contractor after The Boeing Company (BA) and Lockheed Martin Corporation (LMT) in the U.S. in terms of trailing twelve months sales. The company supplies a broad array of products and services to the U.S. DoD, including electronic systems, information technology, aircraft, space technology and systems integration services.
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