Three Companies That Stand to Lose With Budget Cuts
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It is no secret that America is facing mounting debt. In fact if you laid a dollar bill end to end for every dollar of debt the US has, it would circle the earth approximately 59,000 times. So it comes as no surprise that all options remain on the table for the pending budget cuts. One area that could have the greatest impact on some major corporations is defense cuts.
As the very real possibility of a deep cut in defense spending persists, here are three companies that stand to lose if defense spending is slashed.
Lockheed-Martin (NYSE: LMT)
Lockheed-Martin is involved in four business units that supply the US Government. Those units are aeronautics, electronic systems, information & global solutions, and space. If there is a cut in spending, LMT could be affected drastically. In 2010 Lockheed-Martin had over $35 billion in revenue solely from government contracts, which represents 78% of their total revenue. Any defense cuts focusing on reducing the size and scope of the United States military can directly impact a sizable amount of revenue for this perennial government contractor.
Northrop Grumman (NYSE: NOC)
Northrop Grumman is a major supplier of naval and aerospace. They are involved in the production and design of naval vehicle, manned and unmanned aircraft, and a variety of different electronic and radar systems. In 2010, Northrop Grumman has approximately $17 billion in government contracts, which represented approximately 48% of their total revenue.
Raytheon (NYSE: RTN)
Raytheon is a major supplier to the US military of missile systems, most notably their Tomahawk cruise missile. Raytheon is a smaller supplier for the US Government, but still has a sizable amount of revenue tied to the Defense Department. In 2010, Raytheon had almost $15 billion of contracts, which represents 60% of their total revenue for 2010.
With a half a trillion dollars that need to be cut, there undoubtedly will be cuts to the Defense Department’s budget. Those cuts do have the potential to impact the above mentioned companies as well as hundreds of others. With so much money tied to the federal government, look for these and other companies to adapt and change in their scope with our military forces.
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