Boeing verticle integration spells trouble....

[DeepFriar]

....for some. Honeywell, Rockwell and Universal execs are probably sweating a little more today
than yesterday. Boeing says they are going to build their own avionics. Rockwwell's stock slid 6%. Boeing
must have felt that the avionics oligarchy was getting a little too relaxed and not competing effectively.

 

[BrocLuno]

Big ticket systems with decent margins. Good game to be in, but they need to buy somebody to get a leg under the table ...

 

[DeepFriar]

Originally Posted By: BrocLuno
Big ticket systems with decent margins. Good game to be in, but they need to buy somebody to get a leg under the table ...


You raise an interesting point. Going vertical would be easier with a buy. They can do it without that of course but, of the three I mentioned Universal would seem to be the marginal player but others wait in the wings - IS&S, Garmin, SAFRAN and others. Will be fun to watch, gotta love disruption.

 

[Win]

Rockwell Collins uses the old Collins Radio stock ticker, COL.

Boeing's announcement didn't hurt Collins.

 

[DeepFriar]

Maybe. Judging from today's news United Technologies sees this potential outyear order weakness as the proper time to pursue purchasing Rockwell-Collins. This is exactly the same scenario that led Boeing to absorb McDonnell-Douglas. When MacDac's future order book went flat after the A-12 fiasco Boeing picked up the pieces. It's a repeating story as the industry consolidates. If UTC is successful and can get by antitrust I would look for GE to try and pick up Honeywell, something that's been tried in the past. Many of these companies have house-of-cards stock prices with managements that know it'll all self destruct if they don't find a merger/buyer within some period of time. That's less true of Collins than of many others.

 

[nthach]

Since Rockwell Collins also owns ARINC, would that be the grand prize for anyone who wants to acquire them?

Wasn't the Smiths takeover by GE done so they can have sole-source supplies between Boeing and Airbus as was the Goodrich purchase by UTC?

 

[DeepFriar]

ARINC is big but probably not big enough to be the jewel in the Collins crown. ARINC has always been interesting to me in a way. It would be the best source of business intelligence one can imagine sitting at the crossroads of all airline (and many other) networks. I have long been fascinated by ACARS for instance and its potential for control as well as monitoring and have mentioned it here before.

But Collins, or whomever, has to manage it at arms length, I would think, operating as "honest merchant to the trade" or no other company would trust them to do what they do. I would have to call them a prized "industry asset" developing and coordinating standards - a very much needed role in the aviation/communication business which, as we all know, is fiendishly complex in a lot of ways, from technical to political. IMO Collins is one of the few companies with the integrity to be trusted with its ownership.

I am not familiar enough with the other questions you pose to offer an opinion.

 

[DeepFriar]

There is a new opinion piece in Aviation Week that may be interesting to some on this subject. Good discussion on the possible thought process especially about pricing leverage.

http://m.aviationweek.com/commercial-avi...sition-rockwell

 

[DeepFriar]

Boeing's galling reaction to UTC buying Rockwell-Collins has promped me to comment again on this thread. Here we have Boeing having told Collins, among other suppliers, that they are going to sweat the profit out of them on the way to taking the avionics systems work totally in-house in the near to mid future. UTC sees the opportunity to pick up a prized company and Collins decides to sell out. Now Boeing (and Airbus) comes back moaning about how this is anti-competitive and how they're concerned that priority for them will suffer, etc. etc. Hello! What a nerve these jerks have. I haven't looked at it for a few weeks now but I would guess they will complain to the powers-that-be to stop the sale (even easier to do in Europe than here). So, hey, Boeing says "I intend to kill you (or drive your stock price down so I can buy you cheap) but I forbid you to look for a big brother to protect you". Message to Boeing - Drop dead.

 

[MolaKule]

Originally Posted By: DeepFriar
Boeing's galling reaction to UTC buying Rockwell-Collins has promped me to comment again on this thread. Here we have Boeing having told Collins, among other suppliers, that they are going to sweat the profit out of them on the way to taking the avionics systems work totally in-house in the near to mid future. UTC sees the opportunity to pick up a prized company and Collins decides to sell out. Now Boeing (and Airbus) comes back moaning about how this is anti-competitive and how they're concerned that priority for them will suffer, etc. etc. Hello! What a nerve these jerks have. I haven't looked at it for a few weeks now but I would guess they will complain to the powers-that-be to stop the sale (even easier to do in Europe than here). So, hey, Boeing says "I intend to kill you (or drive your stock price down so I can buy you cheap) but I forbid you to look for a big brother to protect you". Message to Boeing - Drop dead.


I have worked for both companies and yes, Message to Boeing - Drop dead.