|
IT still on the hot list
By James. H. Smith
April 24, 2006
The US government is expected to spend US$93 billion on information
technology in 2011, up from US$75 billion in 2006, although the spending
request for 2007 is only one-half a per cent higher than this year,
according to estimates in the market.
advertisement
While some US government programs are being downsized, there will be
increased demand for IT services in the homeland security sector.
Spearheading the increase is the Secure Border Initiative-Net, a program
of the Department of Homeland Security (DHS).
DHS missed its 31 March deadline for issuing a request for proposals
(RFP) for the US$100 million surveillance technology that is the
foundation of the programs but last week released the proposal document.
DHS expects to meet a congressional request to prepare an overall
strategy for immigration policy enforcement and border security by the
end of April.
Three federal contractors -- Ericsson Inc, Lockheed Martin and Raytheon
- have been qualified to bid on the technology contract. Also rumored to
have been qualified are Boeing and Northrop Grumman.
The SBI-Net surveillance technology is expected to eventually cost about US$2 billion.
Sources indicate that the program could prove to be a boon for Small Cap
companies working as sub-contractors to the winning bidder.
Among companies seeking to increase their positions in the homeland
defence market is New York City-based and Nasdaq-listed Zanett which
provides customised, mission-critical solutions to Fortune 500
corporations, mid-market companies, and classified government agencies
involved in homeland defense and homeland security.
Zanett, which operates in the commercial and government arenas, has
embarked on an aggressive expansion programme both internally and
through acquisitions.
Last week, Zanett announced the acquisition of Florida-based DataRoad,
an information technology consulting firm with about US$5 million in
annual revenues.
Zannet said the deal is expected to boost annual revenues to over US$50
million.
The company closed trading on 21 April at US$3.14 - about halfway
between its 52-week hihj/low of US$4.39 and US$2.56.
Separately, US private equity firm Carlyle Group is said to have
appointed JP Morgan, Lehman Brothers and Mediobanca to look at launching
an initial public offering of Avio Group.
Avio Group is an Italian state-owned defense and engineering company
that manufactures aircraft engines and space-propulsion systems. Avio
was acquired from Fiat Group in 2003 for about EUR1.6 billion.
Carlyle Group owns 70 per cent of Avio Group, with Finmeccanica holding
the balance.
Another company in the defense sector that is set to launch an IPO is
CPI International, which provides critical defence and commercial
microwave and radio frequency applications.
CPI has a market cap of US$312.5 million and hopes to sell 7.1 million
shares at an estimated price range of US$16 to US$18 per share.
That IPO is expected to launch this week led by UBS Investment Bank and
Bear Stearns, with Wachovia Securities and Banc of America also acting
as underwriters.
The caliber of the banks underwriting these IPOs is a sure indication
that the party is not over for defense companies.
Disclaimer
James Smith is an independent columnist for this web site. James Smith may
hold long or short positions in any of the stocks mentioned in this article
and those positions can change at any moment.
InvestorIdeas.com Disclaimer:
www.InvestorIdeas.com/About/Disclaimer.asp, InvestorIdeas is not
affiliated or compensated by the companies mentioned in this article. James
Smith is a freelance writer. Nothing in the articles should be construed as
an offer or solicitation or recommendation to buy or sell any specific
products or securities. Past performance does not guarantee future results.
|
