At last report, the U.S. Navy had only nine F-35s (the F-35C variant) in service, with two more ordered for 2015, and four for 2016. (Congress upped the 2015 order to four aircraft, unasked.) That makes the Navy the slowest adopter of the aircraft among the three services using the F-35. As defense analyst Richard Aboulafia, vice president of analysis at the Teal Group, told Navy Times earlier this month, the Navy is "just not that into the F-35."And this...
Indeed, Aboulafia said the Navy could cut its buy down to just 200 F-35Cs in total -- 23% fewer than the 260 originally planned. At $154 million per aircraft, that's a potential $9.2 billion loss of revenue to Lockheed.
And even that's not the worst possible scenario.
"There are some officers in the Navy," warned Aboulafia, who would prefer to "shift all funding to the sixth generation" -- to skip further F-35 purchases, make do with present-day fourth-generation aircraft, and save the service's money for investment in the envisioned new F/A-XX aircraft.
And yet, that remark by Aboulafia echoes: "They're just not that into you." Until Lockheed Martin wins over its detractors, its revenue will be at risk.Read the whole thing here.
Like I said earlier the comments are funny as hell! Lockheed Martin has a two-fer plus problem on its hands. They've allowed (since bloggers had nothing to do with it) the perception of its flagship project to turn negative. Despite the bribes, the economic tomfoolery and the games playing that they've engaged in, many people are infuriated by the lack of development, and the poor performance of this airplane. The fact that many are now pointing to a quasi-recon role as its biggest selling point is not helping the argument.
The next issue is the US budget. Things are bad, the administration would rather spend money on domestic issues and the SecDef has a different idea of warfare.
20 plus years to develop an airplane has consequences. Its like starting the P-51 in 1941 and having it enter service during the Vietnam war.
But the main danger to Lockheed Martin is that an investor page is turning bearish. That could affect stock price. A carefully laid plan is unraveling.
A financial writer not on the LM payroll, one who can really write well.
ReplyDeleteThe Morningstar chart on LM is here.
(Click on 1Y=one year, etc to alter time period)
Price up about 25% in a year despite miserable test results (thank you LM fan-writers), then look down below at the bar graphs, the good and the bad:
good
-net income growth
-high returns on assets and equity
bad
-stock price value to book value - way too high
-debt/equity
neutral
-price/earnings & price/sales
also Morninstar rates LM high in profitability and average in growth
So with those factors in mind let's keep an eye on LM, with the factors Solomon has summarized as the bad news dribbles out, recalling that the bigger they are the harder they fall.
Well, there are few new jets that Lockheed could win. Lockheed is a non-contender in the T-X while Lockheed only bid as a subcontractor to Boeing in the LRS-B program.
ReplyDeleteBut the F-35 will keep the fed well for the next 30 years. It is Northrop and Boeing's military aviation business that we should worry about, because their exits and the Lockheed monopoly of US military aviation is the worst possible outcome. With a Lockheed monopoly, an F-22 replacement will cost $500 million and the F-35 replacement $300 million a copy in 2015 dollars, which will ensure that Chinese will be able to outnumber the USAF 10 to 1 and defeat the US in any conflict via sheer numbers.
Another reason for Lockheed's high stock prices is Lockheed's aggressive stock buyback program, which I am not sure could be sustained.
ReplyDeletei totally disagree. the more i look at combat aviation, the more i look at tech that is soon to come online the more convinced i am that we're in the interyear period just before the start of WW2. people were still building old tech airplanes but they were also dabbling in what they thought were state of the art projects that were rendered obsolete in a few short years.
ReplyDeletewe have lasers coming online. we have advances in radar and computer processing. the future does not belong to the stealth and it doesn't belong to the Chinese.
they're going down hard. the Chinese people are simply pawns in a game.
Aboulafia. About as accurate on mil-aviation issues as a Vietnam-era AIM-7 Sparrow. He occassionally gets some hits. But rarely.
ReplyDeleteOnly problem with your thesis is the people who really can move stocks (mutual funds and big hedge funds) don't care about motley fool. They follow large investment bank sell side research (Morgan Stanley, Goldman, JP Morgan, Barclays, ect). Right now 20 major banks cover Lockheed with 7 rated buy, 12 hold, and 1 sell.
ReplyDeleteIt confirms what some of us "naysayers" have been saying FOR YEARS, why doesn't the Navy just keep on buying SHs and maybe a few ASHornets and go straight to 6th Gen? If F35 was so great and superior, it makes sense to buy it but is it really all that much better than an SH? Sure doesn't seem to me that USN thinks it's worth it to buy a new fighter, new parts, new training, new supply chain,etc.... save some money by keeping it simple and stick to the SHornet.....
ReplyDeleteThat was kinda obvious. In terms of naval air power - the theoretical ability to make your aircrafts stealthy is negated by the practical fact that aircraft carriers are friggin huge, and no way you can sneak them within F-35 strike distance without enemy noticing. That is of course assuming the enemy is technologically competent and posseses modern radars. If he is not, then you don't need the stealth advantage against him anyway.
ReplyDeleteFrom the Navy's point of view - enemy will know when they are coming anyway, and he will even know from which vector he should expect F-35's. Because again, F-35C has rather limited range - so only so many routes to target are possible. Even worse, if you use external fuel tanks - you loose some stealth.
Rarely's good enough in this case. He's correct on Navy/F35 IMO. Navy's portion is ten percent of the total US buy, its CV development is retarded and its CNO isn't strong on stealth. Navy is just not that into the F-35.
ReplyDeleteOnly seven of twenty are "buy?" Looks overpriced. I see that going to zero.
ReplyDeleteThe program has two major events scheduled this year:
-F-35B IOC, which the media is interpreting to mean that it's combat-ready, which of course it isn't. Won't even start operational testing for a year or two.
-ramped-up production four years before a Miletsone C production decision, which is illegal but they are doing it anyhow.
-That includes ramped-up foreign sales, 64 in the nest two lots they intend to negotiate together, or fifty more than in the last lot that took a year to negotiate. This at a time when foreign countries have already greatly reduced their planned buys because of the exorbitant price, and greatly delayed their buys because of the retarded development which continues to slip to the right.
The main characteristic of the F/A-XX fighter, after the awakens from the "stealth epoque" opium dream should be affordability.
ReplyDeleteA pertinent of topic.
For years i was suggesting my Peruvian buddies in a defense forum that instead of wasting more money in their expensive super fast Mirage 2000 very costly to update with french technology or the logistic nightmare Mig29 Peru should follow the same path as Colombia and Brazil with their update Kfirs, and F5EM, both at the same level of top F-16/15 as it was demonstrated in Red Flag exercises.
Now Colombia is testing mirage2000 to complement their very old kfirs that are experiencing a lot of structural problems and Chile is suggested them not to buy old refurbished F-16 for the same reason. Brazil also wants brand new Gripen NG.
The obvious solution for a smaller economy like Peru?, after buying and building under license the Korean KT-1 now it seems is in conversations with Korea for brand new 24 Kai FA-50 for one billion. With that small airplane they intend to replace their Aermacchi advanced trainers, their light attack A-37 and their flying tanks Su-25.
With the right radar the FA-50 could even use the PytonV and Derby to replace the Migs 29 and Mirages 2000 for air defence and standoff attack missiles and bombs like the Spice and Delilah for interdiction.
What else do you need from a cheap and maneuverable small fighter, very hard to see , that could even use the F414 engine with 24% more thrust to have the same thrust to weight ratio as a mini Typhoon to be a nightmare in dogfight?
Affordability, great punch for the buck, small radar cross section, and a maintenance cost cheaper than the original Gripen, like the F-20 Tigerhawk was intended to be, unfortunately it was a too advanced concept for it's epoque.
It seems the FA-50 will profit from all the advantages of the standoff weapons, Aesa technology, helmet mounted display a d off boresight missiles and small Israeli jammers to be the next small wonder for small economies now that Saab decided to jump to a costless category for pretty much the same weight.
The US should think more in quantities than luxury.
At the end quantity has a quality on its own.
https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcRas5YlQCLnTjByxasXkOl5EwvPDPj93YM1s47mPr6UaDS-HYQ10Q
South Korea - KAI busca la venta de 24 Aviones FA-50 Golden Eagle a Peru
http://youtu.be/8WxboUp_Fq4
http://youtu.be/QnZ3M5FH6Uc
:http://youtu.be/iXauYBgqnHw
http://youtu.be/mBTVHeSyP_w
http://youtu.be/SlZuPWou7Z8
http://youtu.be/xrT2KtSzMd0
Israel just "bought" another 14 F35s, LOL!
ReplyDeletehttp://finance.yahoo.com/news/israel-announces-purchase-14-more-115011091.html
yeah i read that long before i put this up. what has me wondering about DEFENSE JOURNALISTS (AGAIN!!!!) is the fact that no one can put together obvious issues. did you notice that this announcement is coming just ahead of the Netanyahou visit and speech? this is so obvious that its not even funny. there is a perception that Israel needs to repair relations with the US. what better way to rebuild that bridge with the Pentagon then announcing that you're gonna buy a troubled airplane which will give it much needed positive news.
ReplyDeleteIsrael gets its plane at a discount yet gets to tell the Pentagon that you owe us one.
its really kinda simple but no one is latching onto the idiocy of such a move and looking for the why to it all.
"Another" should also be in quotes. There was no other to make an another. It's all bullshit, so when the reality hits, as it is bound to, it will be interesting.
ReplyDeleteBy the way, it was 14 F-35A at $2.82 billion, or $201 per plane. So much for the decreasing price BS.
Maybe nobody cares about Motley Fool, but it got top billing on Topix Lockheed here</a. Nibble, nibble.
ReplyDeleteThe Navy is supposed to lead the JSF program. From the JPO Leadership page:
ReplyDeleteThe F-35 Lightning II Program is a joint program with no lead service, staffed by Air Force, Navy, and Marine Corps personnel. The Program Executive Officer position alternates between the Departments of Navy and Air Force, and reports to the Service Acquisition Executive (SAE) of the other service.
Currently the Program Executive Officer, General Christopher Bogdan, according to this, reports to the Navy's Sean J. Stackley, the assistant secretary of the Navy (ASN) (Research, Development & Acquisition (RDA)).
But we know this isn't the case. Bogdan, the exec, manages the program, appears at conferences and on television, testifies before Congress, and in all ways controls the program.
Why is this? Why is JSF program the only military enterprise run by the executive officer? Why is Stackley never heard from? Stackley's name doesn't even appear on the JSF Leadership page.