Replies to post #18066 on TommyBoyTrader

[TommyBoyTrader9460]

Thanks LostSaint...Great post..best of luck to you..keep us posted..

[LostSaint]

$$AUTLY Lockheed Martin just may lose $10s of BILLIONS to their
competition..

Could Lockheed lose?

Citing repeated "Corrective Action Requests" from the Navy, criticizing the quality of Lockheed Martin's shipbuilding, Bloomberg noted that Lockheed has yet to fix quality concerns dating as far back as May 2015. Importantly, Bloomberg reported that no similar CARs have been lodged against Lockheed's archrival on the LCS program, Austal.

Lockheed's response to these criticisms is that the three Freedom-class LCS vessels it has delivered to the Navy so far "have met or exceeded Navy specifications for quality and performance prior to acceptance." But that doesn't address the problems the ships have encountered after their acceptance. Specifically, two of the three ships USS Fort Worth (LCS 3) and the USS Milwaukee (LCS 5), have suffered breakdowns in the past six months. We haven't heard of any similar incidents afflicting Austal's Independence-class warships.

What it means to you

So what does it mean to investors? Lockheed Martin's revenue stream amounts to $48 billion in business every year. Losing $5 billion in expected LCS revenue, over a term of several years, will sting, but it won't inflict a mortal wound on Lockheed. In contrast, Austal does barely $1 billion in business a year as things stand. If Lockheed's lax quality controls end up handing the Australian shipbuilder the entirety of the remaining $10 billion in LCS funding, that will be a real windfall for the stock.

The upshot: Right now, the odds look to be in Austal's favor. Place your bets accordingly.

Full article:

http://www.fool.com/investing/general/2016/05/22/lockheed-martin-could-blow-this-29-billion-franchi.aspx