Boeing and ViaSat to Tango

The Boeing Company (BA - Analyst Report) has awarded contracts valued at approximately $40 million to rival ViaSat Inc. (VSAT - Snapshot Report) to develop a ground-based beam forming (GBBF) system for the Mexican Satellite System (“MEXSAT”). The beam forming system is designed to operate with the Boeing L-band geomobile satellite system being provided for Secretaria de Communicaciones y Transportes (“SCT”) of Mexico.

ViaSat is under contract to supply Boeing with GBBF processors, the control and management system, and the uplink beacon stations to be deployed in two ground stations in Mexico City and Hermosillo, Mexico.

The system creates hundreds of small, flexible, adaptive "spot" beams on the earth that link small, handheld satellite devices. While the beams are projected down on the earth by the satellite, the GBBF system performs the actual beam-shaping signal processing.

Boeing is proactive at seizing the Mexican satellite market even if it means joining hands with arch-rivals. Earlier also Boeing procured one satellite and certain ground-operations equipment from rival Orbital Sciences Corporation (ORB - Snapshot Report) to meet MEXSAT requirements.

Based in Carlsbad, California, ViaSat provides networking products and managed network services and offers high-speed satellite broadband services under the WildBlue brand. The company is also a key supplier of network-centric military communications and encryption technologies and products to the U.S. and allied governments.

Boeing has a unique position as the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries. Besides, it is one of the largest aerospace and defense contractors in the world. Also its revenues are spread across more than 90 countries around the globe.

Earlier, strong performance from the commercial airplanes business and stable core operations allowed Boeing to register a solid second quarter 2011. The company surpassed both the year-ago results and the Zacks Consensus Estimates. Boeing has raised its earnings per share guidance range for fiscal 2011 to $3.90 – $4.10 from the earlier band of $3.80 – $4.00, encouraged by a solid second quarter 2011.

However, Boeing lowered its commercial airplane delivery guidance for 2011 to a range of 485 – 495, from 485 – 500 forecasted earlier. The reduction was due to lower planned deliveries in the second half of 2011 on development programs (especially 787 and 747-8 units).

The Zacks Consensus Estimates for third quarter 2011, fiscal year 2011 and fiscal year 2012 currently stand at $1.07 per share, $4.25 per share and $5.30 per share, respectively.

Boeing currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are maintaining our Neutral recommendation on the stock.

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