Essay - Northrop Grumman Economic Climate Northrop Grumman (Noc, Nyse) is in...

Northrop Grumman

Economic Climate

Northrop ***** (NOC, NYSE) is in an excellent position within the next two years to continually manage topline revenue growth in the key business sectors of Information and Services, Technical Services, Information technology, Electronics, and Ships. Information and Services specifically is expected to deliver an 8% to 10% increase in FY 2007 ***** revenue ***** with ***** Services be*****g the biggest contributor due to large logistics deals in ***** pipel*****e including those from LOGCAP, Linguist and CFT. Margins in technical Services however lag other sectors of the company yet have the greatest topline ***** growth potential *****in the Information & Services overall sector of *****ir *****. The Electronics sector, which is the largest and historically the most profitable for the *****, is expected to ***** a modest 5% *****pline revenue growth perform*****nce level for ***** company, gated only by the periodic charges taken from competing on fixed-price development programs including ASPIS II, f016 Block 60 electr*****ics ***** Project Wedgetail.

Despite all *****se promising aspects of sector per*****mance for Northrop Grumman, the stock continually underper*****ms its peers in the large-cap defense ***** by 12%, delivering an *****% return YTD versus ***** industry average of 20%. The losses of very high profile projects in the Aerospace and Defense sector coupled with the impact of Hurricane Katrina on the company's ability to sustain its relatively high growth shipbuilding operation have continued to challenge the company's ***** to deliver valuations consistent with the norms ***** its industry averages. The fact that the contracts in place today are solid through ***** election year also is cause for optimism ***** Northrop-Grumman's ability to increase its ***** performance relative to *****. Finally on November 1oth, 2006 Northrop Grumman chose their annual investors' c*****ference in New York City to announce the acquisition of Essex Corporation. Northrop Grumman paid $24/share for Essex, ***** represented a 20$ premium over their closing price on Thursday November 9th, 2006. The total value of the transaction is $*****80M, and the 1,000 member company has roughly 67% of its work*****ce enabled with security clearances, in addition to having sizeable contracts ***** the ***** Department and Transportation Security Admin*****tration (TSA).

***** is best known as ***** maker of SIGINT systems and services.

***** Grumman Operations

The four dominant sectors of Northrop-Grumman's business are Information & Services, *****, *****, ***** Ships. The company chooses to financially report subsectors of their business that have significant ***** and net income, as is shown in the follow*****g table, Analysis of Key Business Segments.

Information & Services is comprised of Mission Systems, Information technology, and Technical Services. Taken together, this sector of operations is expected to grow between 8% ***** 10% based on increased intelligence spending ***** the US government, state and local ***** on IT services throughout the U.S Of these sectors, Northrop Grumman manager ***** staffing up Information Technology the most aggressively, quadrupling its size over ***** last four **********, and has a sizeable pipeline ***** deals specifically from state and local *****s needing