Defense Sector Rumblings Ahead

Highlights include The Boeing Company (BA - Analyst Report), General Dynamics Corp. (GD - Analyst Report), Lockheed Martin Corp. (LMT - Analyst Report), Northrop Grumman Corp. (NOC - Analyst Report) and Raytheon Company (RTN - Analyst Report).

Awhile back, we published the following warning regarding the Defense Sector: Watch out for the light at the end of the tunnel -- it could be the termination express! Well, it looks like the train is about to arrive.

Reportedly, Defense Secretary Gates is readying the most extreme changes to the Pentagon's spending plans since the end of the Cold War. It is possible that the Pentagon will call for the termination of as many as 6 major weapons systems as soon as the end of March. Programs which are probably on the block include the DDG X Destroyer and the F-22 Lightening II. And these are just the starters. If history repeats itself -- as it has many times in such instances -- other programs will also be axed further down the road to extinction.

The known (there are items hidden in other budgets) Dept. of Defense budget for next year is $534 billion. With all the other demands being put on our financial resources -- including a war in Afghanistan which many observers feel is unwinnable -- this may be the highest defense budget for many years to come.

The big companies that will be affected by such actions are the normal list of suspects: Boeing (BA - Analyst Report), General Dynamics (GD - Analyst Report), Lockheed Martin (LMT - Analyst Report), Northrop Grumman (NOC - Analyst Report), Raytheon (RTN - Analyst Report), et al.

However, there are a myriad of suppliers that will also be impacted -- just at the same time that Commercial Aerospace is in a nosedive.  When it rains, it pours!