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Author: FoolishFlyer Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 294  
Subject: Re: SOLD!!!! Date: 5/17/1999 1:07 PM
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Should we take the General Dynamic stock.

I was debating whether to hold GAC or sell in favor of a better stock. Looks like this deal answers my question. I'll put in a limit sell in the high 60's.

General Dynamics merged with Lockheed earlier in the decade. Currently they make the F-16, which just celebrated it's 25th year in the U.S. Air Force. The Joint Strike Fighter is slated to replace the F-16 in the next century. Lockheed/GD is fighting Boeing for the multi-billion dollar contract to build JSF's for the Navy, Air Force, Marines and Royal Navy. This has the potential to be a make-or-break contract. The winner rakes in profits, the loser gets scraps from subcontracts. Another Lockheed/GD product is the F-22 Raptor. This should keep the company going for the next 20 years.

GD also brings to the mix its Electric Boat Division, which makes the Navy's fast-attack and ballistic missile submarines--namely the Los Angeles class, Ohio class and Seawolf class boats.

I don't see much growth in Electric Boat. On one hand, their only competitor for building nuclear ships is Newport News Shipyards. On the other hand, the Navy is decommissioning the older LA class subs, the Ohio contract is finishing up, and the Seawolf is the submarine the Navy ultimately didn't want. (They were designed for blue water, cold war, Soviet submarine hunting. The strategy is now focused on "littoral" operations--supporting the war by striking from coastal waters. That makes nuclear subs very expensive missile carriers.)

Electric Boat won't die. The Navy won't let that kind of expertise go away. They're already looking for the next century nuke sub. But, it's only on paper. Probably be at least another four to five years before they cut steel.

If you're looking for growth, it isn't at Lockheed/GD. Value maybe, but mainly because, in the spirit of competition and redundancy, the Feds want at least two contractors available to build their war toys.

Anyway, I think when the price is right I'll sell out and put it in tech. Hmmm...Yahoo!?

Dave
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