Bill Loomis (firstname.lastname@example.org) is a managing director at Stifel Nicolaus. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors. For additional information and current disclosures for the companies discussed herein, go to the research page at www.stifel.com.
After investors sold them off in the beginning of the year over concerns about lower defense spending, federal IT service stocks have roared back, with many reaching all-time highs in recent weeks.
With the first quarter earnings season complete, most federal IT service companies reported at or above expectations and gave solid outlooks for the year, although a couple were cautious on the second quarter.
The fourth quarter earnings reporting season has wrapped up with the public federal IT service firms posting solid results.
Despite investors' concerns over slower defense and IT spending, President Bush's fiscal 2006 IT budget request to Congress asks for a 7 percent increase, better than the 0.9 percent request in 2005 ? subsequently revised to 3.9 percent by the Office of Management and Budget ? and better than the increase I was expecting.
Despite positive earnings reports from federal IT services providers throughout 2004, the group's stock performance was mired for most of the year by the uncertainty of political elections and potential budget slowdowns.
Despite no change in strong business trends among the federal IT service companies over the past few quarters, investors have been driving stocks higher in the past couple of months.
BAE Systems Plc. announced this month that BAE Systems North America, its wholly owned U.S. subsidiary, has entered into a definitive agreement to acquire DigitalNet Holdings Inc.
Investors often ask me whether bigger is better in the federal information technology industry. What size do companies have to become to be competitive?
Despite two quarters of mostly good earnings reports from federal IT service firms, these companies continue to underperform in the S&P 500.
After three consecutive quarters of improvement in business performance, commercial IT spending dropped in June. Dozens of commercial software and hardware companies preannounced weak second-quarter results, blaming customer purchase delays and a lack of large sales.