Raytheon's rise in profits reflects new world order

Ability to deliver high-tech capabilities to combat insurgencies makes for sound profit

Reports on second-quarter earnings reveal defense contractors that are focused heavily on high-tech capabilities needed for fighting insurgencies are doing better than those more heavily invested in conventional warfare.

Raytheon Co. and Northrop Grumman Corp. reported divergent earnings for the second quarter this week, a development that reflects key changes in the Defense Department’s weapons buying strategies, report Stephen Manning and Stephen Singer of the Associated Press.

Raytheon’s second-quarter earnings rose 15 percent, while Northrop Grumman’s quarterly profits dropped 20 percent.

The defense industry is undergoing seismic shifts as the DOD channels its funds toward technologies and platforms needed for fighting wars in remote places like Afghanistan. The need for high-tech weapons to fight insurgencies means fewer dollars for expensive weapons such as warships, new fighter aircraft, and large ground vehicles.

Defense Secretary Robert Gates stated in April that substantial funding will go to intelligence, surveillance and reconnaissance capabilities necessary to succeed against insurgents. Contractors are closely tracking long-range DOD planning to better position themselves for future contracting opportunities.

Raytheon said it made $489 million in the April-June quarter, up from $426 million in the same quarter last year. As for Northrop Grumman, it earned $394 million, down from $495 million a year ago.

Northrop Grumman was hurt by, among other things, higher estimates of costs to complete several ships being built in its Gulf Coast yards, according to a separate AP story that was published in the Los Angeles Times.

Raytheon attributed its rising sales over the long term to a higher volume from Army programs, as well as other efforts, reported James Schultz in Washington Technology.

Defense contractors should have a sharper picture of defense spending in future years when the Quadrennial Defense Review is submitted to Congress next year.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here


  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Our databases track awards back to 2013. Read More

  • Navigating the trends and issues of 2016 Nick Wakeman

    In our latest WT Insider Report, we pull together our best advice, insights and reporting on the trends and issues that will shape the market in 2016 and beyond. Read More

contracts DB

Washington Technology Daily

Sign up for our newsletter.

Terms and Privacy Policy consent

I agree to this site's Privacy Policy.