Zacks_Analysts' Blog : Boeing Acquiring Cyber Security Biz - Analyst Blog

The Boeing Company (BA) has entered into an agreement to acquire Solutions Made Simple Inc. (“SMSi”). The terms of the transaction were not disclosed. The company expects the deal to be completed during the third quarter of 2011.

Based in Reston, Virginia, Solutions Made Simple Inc. is an information services provider for the U.S. government and the Intelligence Community. SMSi's technology allows users to easily extract, share and query information stored in an unlimited number of data sources and applications with the help of its Twister data integration framework products.

Boeing’s association with SMSi dates back several years and the buyout would add important vertical content to Boeing's product portfolio for two high-growth markets, namely Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance, and Cyber security.

Post acquisition, SMSi will operate within the Information Solutions division of Boeing’s Defense, Space & Security business wing. This segment runs one of the world's largest defense, space and security businesses  specializing in innovative and capabilities-driven customer solutions, besides being the world's largest and most versatile manufacturer of military aircraft.

The Boeing Company is one of the largest aerospace and defense contractors. With the gradual recovery of the global economy, we expect freight and passenger traffic of the company to improve going forward. Meanwhile, the U.S. defense budget is also skewed towards a number of prominent Boeing programs. Overall, the growth momentum will be maintained by strong order booking and a globally diversified customer base.

However, in the near term, headwinds over 787 delays and expected cutbacks in the U.S. defense budget threaten the current valuation of the company. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

On July 27, 2011, Boeing is expected to release its second quarter results. Going forward, the Zacks Consensus Estimates for second quarter 2011 and fiscal year 2011 are currently at 96 cents per share and $4.13 per share, respectively.

Headquartered in Chicago, The Boeing Company is a premier jet aircraft manufacturer and one of the largest defense contractors in the U.S. The company’s customers include domestic and foreign airlines, the U.S. Department of Defense, the Department of Homeland Security, the National Aeronautics and Space Administration, other aerospace prime contractors, and certain U.S. government and commercial communications customers. The company mainly competes with Northrop Grumman Corporation (NOC) and Lockheed Martin Corporation (LMT).