L-3 Communications Holdings Inc.
) division, Communication Systems-West (CS-West) has received a
full-rate production contract for CDL Hawklink for the period 2012
to 2017. The contract is worth $181 million, of which $28 million
will be received in full-year 2012. This contract follows a prior
initial production contract worth $141 million that the company had
received in June 2009.
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L-3 Communication's Ku-Band CDL Hawklink system, a high-speed
digital data link, broadcasts tactical video, radar and acoustic
sensor data from the U.S. Navy's MH-60 Romeo Light Airborne
Multi-Purpose System helicopter to its host surface ships. The CDL
Hawklink system comprises AN/ARQ-59 airborne terminal and the
AN/SRQ-4 shipboard terminal that allows doubling of the Hawklink's
current data rates for the MH-60R at ranges to more than 100
Besides supporting a full range of surveillance, anti-submarine
warfare and recovery missions, the CDL Hawklink system is
appropriate for a variety of platforms as they provide extended
range, high data rates and proven operational reliability.
L-3's CS-West is a leader in communications systems for
high-performance intelligence collection, imagery processing and
satellite communications for the DoD and other government agencies.
There are few other contracts also flowing in for the company.
Recently, the company's Link Simulation & Training UK business
received a contract for the delivery of two A320 Full Flight
Simulators and one A320 Flat Panel Trainer from China-based Spring
Airlines. All the training devices will be supplied during the
fourth quarter of 2013 to the airline's future training center at
Shanghai Pudong International Airport.
Based in New York City, L-3 is a prime contractor in Command,
Control, Communications, Intelligence, Surveillance and
Reconnaissance systems, aircraft modernization and maintenance, and
national security solutions. L-3 is also a leading provider of a
broad range of electronic systems used on military and commercial
L-3 Communications' revenue base is spread across a broad
diversification of programs that insulates it from risk. Over the
longer run, we view the company as one of the best-positioned pure
defense players based on its non-platform focus, broad
diversification of programs and its focus on shareholder value.
However, negative offsets include the loss of key contracts,
defense spending cuts and the lack of near-term catalysts. Order
growth and volume increases also remain dubious in this challenging
environment. Thus, we would advise investors to remain on the
sidelines for now until the ongoing macro headwinds subside.
The company presently retains a short-term Zacks #4 Rank (Sell). We
have a long-term Neutral recommendation on the stock.
The company mainly competes with
API Technologies Corporation