According to market rumors, diversified business conglomerate
United Technologies Corp.
) is considering the strategic sale of its wholly-owned
subsidiary Sikorsky Aircraft Corp. Although the company's
spokesperson declined to comment on this, share prices seemed to
react positively on the news as the stock was up 1.8% to close
the trading session on Jan 27 at $113.79.
CRANE CO (CR): Free Stock Analysis Report
CARLISLE COS IN (CSL): Free Stock Analysis
ICAHN ENTERPRIS (IEP): Get Free Report
UTD TECHS CORP (UTX): Free Stock Analysis
To read this article on Zacks.com click here.
Sikorsky is one of the world's largest manufacturers of military
and commercial helicopters. It also provides aftermarket
helicopter and aircraft parts and services for its parent company
United Technologies. Major production programs at Sikorsky
include the UH-60M Black Hawk medium-transport helicopters and
HH-60M Medevac helicopters for the U.S. and foreign governments,
the S-70 Black Hawk for foreign governments, the MH-60S and
MH-60R helicopters for the U.S. Navy, the International Naval
Hawk for multiple naval missions, and the S-76 and S-92
helicopters for commercial operations.
Speculations are rife that United Technologies is planning to
divest the loss-making Sikorsky to improve its overall
profitability. In the just-reported fourth quarter 2013, Sikorsky
sales were down 12.8% year over year to $1897 million. For full
year 2013, Sikorsky sales declined 7.9% to $6,253 million, while
operating profit decreased 16.6% year over year to $594 million.
European companies seeking to enter the U.S. helicopter
manufacturing market could be potential candidates for the bid.
However, a report claimed that discussions (if at all) are in a
nascent stage and may not actually culminate in actual sale. A
transaction of this nature, with the potential of reshaping
industry dynamics, runs the risk of many ifs and buts. Such a
divestment might not at all get through. But what it has surely
done is set the ball rolling for diversified conglomerates like
United Technologies to consider restructuring their operating
segments to revive their sagging bottom lines.
Based in Hartford, Conn., United Technologies provides high-end
technology products and services to the building systems and
aerospace industries worldwide. The company is a diversified
business conglomerate serving various end markets, such as,
aerospace, defense and commercial construction. The business
diversification allows the company to remain profitable even in a
tough economic climate.
The operations of the company are primarily classified into two
principal businesses: commercial and aerospace. Under its
commercial business, the company has Otis and the UTC Climate,
Controls & Security division, which combined the former
Carrier and UTC Fire & Security divisions. The aerospace
business of the company consists of Sikorsky aircraft and the UTC
Propulsion & Aerospace Systems, which includes UTC Aerospace
Systems and Pratt & Whitney divisions.
United Technologies presently has a Zacks Rank #3 (Hold). Other
companies in the industry that are worth mentioning include
Carlisle Companies Inc.
Icahn Enterprises, L.P.
), each carrying a Zacks Rank #2 (Buy).