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Posted by: Black Iguana (IP Logged)
Date: April 10, 2014 04:57PM

The sequestration in the budget by the U.S. government had spoiled the game for many an aerospace company. The one to be hit most was United Technologies (UTX), with its helicopter production and services segment, Sikorsky, taking the worst hit. The segment generates a majority of its sales from government orders and so revenues for the past two years fell by nearly 15% to $6.3 billion in 2013.

Even after such challenging market conditions, Sikorsky has showed character by deciding to face it head on. To go about their plans, the company, Sikorsky in particular, has decided to devote all he resources towards the international military and global commercial helicopter markets. The company has replaced its old structure, which consisted of three different companies: Sikorsky Global Helicopters, Sikorsky Military Systems and Sikorsky Aerospace Services, with two new segments: Sikorsky Commercial Systems & Services and Sikorsky Defense Systems & Services. This will help the company to cater to the client base in a better and organized way. For the record, Sikorsky constituted around 10% of United Technologies' $62.6 billion in revenues in 2013.

If we look at the old structure of the legendary Sikorsky, its fathers had designed it to serve the company’s purpose of diversifying itself into the global helicopter aftermarket and commercial original equipment sales from its U.S. military focus. All that changed recently when the company began dividing itself into three different segments responsible for development, production and after sales service and support respectively. The new structure, on the other hand, which divides Sikorsky’s business along commercial and defense lines, will help it serve one customer with one company. So across a helicopter’s entire life cycle from development, production and after sales service, a Sikorsky customer will need to interact with a single interface, either its commercial (Sikorsky Commercial Systems & Services) or defense (Sikorsky Defense Systems & Services) segment.

This system has been described as good for the goings of the company by the industry experts as the company has followed it up from the success in their commercial businesses.

The payout from the company has always been brilliant and the recent developments in its commercial business imply that it’s only going to get better. Therefore I’d give thumbs up to the company and ask the investors to put their money on UTX.

Stocks Discussed: UTX,
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Posted by: batbeer2 (IP Logged)
Date: April 11, 2014 10:58AM

At first glance, it seems to me two most impressive trends for UTX are:

1) The explosion of (accounting) goodwill over the least 10 years.

2) The explosion of debt over the same period.

I wouldn't be surprised if management is collecting huge bonusses for growing EPS. In fairness, that is precisely what they have done but at some point, something will have to change. This can't go on.

Stocks Discussed: UTX,
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