Lockheed Bows To Trump, Will Cut F-35 Program Costs Significantly

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December 24, 2016 7:01am NYSE:LMT

From Tyler Durden: It appears the so-called ‘Twitter-spanking’ approach of president-elect Trump is working. First Carrier, then Ford, and now, following his earlier jab at Lockheed’s F-35 costs by asking Boeing to price-out a comparable F-18, Lockheed Martin CEO Marillyn Hewson has reportedly given Trump her “personal commitment” to “aggressively” drive down costs of the F-35 program.


The question is what was the quid-pro-quo in this instance?

Following this tweet from Trump…

CNBC reports that:

Lockheed Martin CEO Marillyn Hewson speaks with Trump, says she “gave him my personal commitment” to drive down F-35 program cost “aggressively”

 

As yet again Trump appears to have won. It is perhaps no wonder though given that 78% of Lockheed’s net sales were from the US GovernmentAs LMT’s Annual report shows:

The F-35 program is our largest program, generating 20% of our total consolidated net sales, as well as 59% of Aeronautics’ net sales in 2015.

 

In 2015, 78% of our $46.1 billion in net sales were from the U.S. Government, either as a prime contractor or as a subcontractor (including 58% from the Department of Defense (DoD)), 21% were from international customers (including foreign military sales (FMS) contracted through the U.S. Government) and 1% were from U.S. commercial and other customers.

So your biggest customer – by a country mile – is putting pressure on you to cut costs or he will cease his purchases of your biggest revenue producer to your biggest competitor… what would you do?

Maybe having a “dealmaker” in The White House won’t be so bad after all?

The Lockheed Martin Corporation (NYSE:LMT) closed at $249.59 -3.34 (-1.32%). Year-to-date, LMT has gained 14.94%, versus a 10.71% rise in the benchmark S&P 500 index during the same period.

This article is brought to you courtesy of ZeroHedge.


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