Rockwell Collins, Inc. reported mixed results in the third quarter
of fiscal 2014 as earnings beat the Zacks Consensus Estimate but
sales missed. On a year over year basis, the top and bottom lines
improved primarily due to strong contribution from the Information
Management Services segment due to the ARINC Inc. acquisition,
higher commercial aftermarket & original equipment sales, and
an effective share buyback program. The company's revenues at the
Commercial Systems segment is expected to improve in the future due
to higher demand for the Boeing 787 aircraft. Rockwell Collins
stable financial position, steady focus on research &
development activities and systematic investment in inorganic
growth programs are expected to boost its future performance.
However, dependence on international sales, delays in funding
authorizations by the U.S. government and higher exposure to the
fixed price contracts raise concerns. Thus, we maintain our Neutral
Cedar Rapids, IA-based Rockwell Collins, Inc. was incorporated
in Mar 2001. The company designs, manufactures, and supports
software and hardware solutions for aircraft communication,
navigation, signals intelligence, and weapons systems as well as
surveillance systems for government, military, and commercial
Rockwell Collins has operations in the U.S., France, Canada,
U.K., Germany, China, Japan, Singapore, India, Israel, Australia,
Chile and Brazil. The company also has engineering facilities,
sales offices, warehouses and service locations in 27 countries
On Dec 2013, Rockwell Collins acquired airline communications
and information processing solution major, ARINC Inc., a portfolio
company of The Carlyle Group, for a whopping $1.42 billion. Hence,
beginning first quarter of fiscal 2014, Rockwell Collins created a
new Information Management Services segment. Certain amounts
previously included in the Commercial Systems segment have been
reclassified to the newly formed segment.
Earlier, Rockwell Collins served its worldwide customer base
through two business segments: Government Systems and Commercial
Systems. The company currently has three segments Government
Systems, Commercial Systems and Information Management
Government Systems business supplies defense electronics and
integrated systems, including communication, navigation, and
displays for airborne, ground, and shipboard applications to the
U.S. Department of Defense (DoD), foreign militaries, and
manufacturers of military aircraft and helicopters. These systems,
products and services support airborne (fixed and rotary wing),
ground and shipboard applications. Government Systems product
category sales are divided into airborne and surface solutions.
Airborne solutions focus on tanker, rotary wing, fighter/bomber,
unmanned aerial vehicles (UAV) and precision weaponry
Surface solutions focus on handheld cum vehicle-mounted
navigation devices, communications and navigation products.
Commercial Systems business supplies air transport aviation
electronics (original and after market equipment and wide-body
in-flight entertainment) and business and regional aviation
electronics (original and after market equipment).
During first-quarter 2014, Rockwell Collins formed a new
business division, Information Management Services segment,
clubbing up the newly acquired operations of ARINC Inc. and the
existing flight services business.
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