Northrop Grumman Corporation
) has received a five-year contract worth $12.1 million from
Public Works Government Services Canada. As per the contract, the
company will have to provide in-service support for the MK-49
inertial navigation systems and navigation data distribution
systems installed aboard surface ships and submarines of the
Royal Canadian Navy.
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Apart from three land-based systems, the in-service support task
will be for systems installed on 12 Halifax-class frigates, three
Iroquois-class destroyers, four Victoria-class submarines and two
Protecteur-class auxiliary oiler replenishment ships. This
contract from Canada's Department of National Defense ("DND")
includes material spares and software maintenance for the
The MK-49 inertial navigation system depends on Northrop's unique
ring-laser gyro technology that provides highly accurate
position, attitude, velocity and heading inputs to the ships'
navigation and fire-control systems for ensuring stabilized
weapons initialization under all sea conditions. Northrop, being
a world leader in ring-laser gyro technology, is best suitable
for the system. It supplies the standard ring-laser gyro
equipment used on NATO ships.
Since 2001, this is the fourth in-service support contract
received by Northrop from DND. Per the previous contracts, the
company had designed and delivered the MK-39 inertial navigation
system, the SRD 331 Speed Log and related software to Canada.
With each contract, the company has been fulfilling and reducing
the DND's need to maintain spares and support services.
Recently, in October Northrop had received a contract from Cessna
Aircraft Company to provide gyro-compassing, hybrid inertial
navigation systems as core components of the avionics system for
the 680 Citation Sovereign business jet aircraft. This indicates
that Northrop's product line is well positioned in high priority
categories, such as defense electronics, unmanned aircraft and
missile defense. Moreover, going forward, revenue and earnings
growth continue to be driven by its strong presence in the
current focus areas of cyber security, modernization of defense
and homeland security assets, intelligence, surveillance and
reconnaissance (ISR) systems, advanced electronics and software
However, defense cutbacks on high-cost platform programs,
over-exposure to the DoD budget, lower backlog, cost over-runs
and reductions in the Afghanistan and Iraq operations remain
matters of concern.
Lockheed Martin Corporation
General Dynamics Corporation
), the company presently retains a short-term Zacks #3 Rank
(Hold) that corresponds with our long-term Neutral recommendation
on the stock.
Northrop Grumman is a leading global security company that
provides innovative systems, products and solutions in unmanned
systems, cybersecurity, C4ISR, and logistics and modernization to
government and commercial customers worldwide.