) has completed the acquisition of Government Solutions business
of SafeNet Inc. for an undisclosed amount. The need for acquiring
a privately held data security firm comes in the light of
supporting the U.S. government's growing need for protected and
Based in Torrance, California, SafeNet Inc. provides Government
Solutions that include encryption products for integration at all
levels, and target high-speed, satellite, networking, data link,
voice, key management, and wireless communication markets.
Therefore, the acquisition would increase the company's ability
to provide the most advanced encryption capabilities required for
the safety of classified data by government customers.
SafeNet's Government Solutions business entirely complements
Raytheon's requirements. It brings in broad range of
federally-approved encryption solutions that are best suitable
for the U.S. military to securely transmit classified voice and
data traffic. The transaction would integrate well with
Raytheon's existing solutions and hence would provide information
assurance to government and industry customers today as well as
SafeNet Inc. will become a part of Network Centric Systems
("NCS") segment. The transaction is not accretive to Raytheon's
earnings in the fourth quarter of 2012 or full- year 2013.
Recently, in December 2012, BBN Technologies, a unit of NCS,
received a contract to develop new techniques to perform research
and develop tools to integrate new and individual facts into
existing large information stores. The company would discover the
interconnections between disparate data elements and the
tactically and strategically significant nuances. We believe that
these kinds of acquisitions would help the company in performing
task while maintaining its relationship with various customers.
Moreover, the company is moving well with its acquisitions and
improving its portfolio. Recently, in October 2012, Raytheon had
completed the acquisition of Teligy, Inc. that has improved the
company's cybersecurity offerings in wireless communications,
vulnerability analysis, reverse engineering and custom kernel
software/device driver development.
In October, Raytheon Company reported third-quarter 2012 adjusted
earnings of $1.60 per share, beating the Zacks Consensus Estimate
of $1.27 per share. The result was also higher than the year-ago
earnings of $1.39 per share.
Among the large-cap defense players, Raytheon is one of the
best-positioned companies. Going forward, revenue and earnings
growth would continue to be driven by its strong presence in the
areas of Intelligence, Surveillance and Reconnaissance (ISR); air
& missile defense systems; border security; air traffic
management; training and homeland security; and cyber security.
This is, however, offset by apprehensions over the future growth
of the U.S. defense budget, the fate of high-cost programs, risks
related to key project executions and order cancellations. The
company presently retains a short-term Zacks #3 Rank (Hold) that
corresponds with our long-term Neutral recommendation on the
Based in Massachusetts, Raytheon Company is one of the largest
aerospace and defense companies in the U.S., with a diversified
line of military products, including missiles, radars, sensors,
surveillance and reconnaissance equipment, communication and
information systems, naval systems, air traffic control systems,
and technical services. Some of its main competitors are
L-3 Communications Holdings Inc.
FLIR Systems Inc.
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RAYTHEON CO (RTN): Free Stock Analysis Report
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