Osama and the blossoming of the Defense Sector

Taming terrorism is the only way to prevent this sector from prospering

More info : pdf1, pdf2

If someone happened to ask you to guess which company these sales figures happened to be, what would your guess be ? What are the  possible directions your mind could head into ? I can tell this for certainity though, after the 9/11 and the subprime crisis and subsequent recession which we have been plunged into; our thoughts shouldn’t wander towards any of these sectors

  • Software Sectors
  • Financial sectors
  • Food
  • Clothing

But we could take a big cue from the spending of the US government. We keep hearing about the trillions of dollars being pumped into war and security and the smartest guess would be some company which deals with defense equipment. The above chart belongs to one such company: L-3 Commmunications.

L-3 Communications Holdings, Inc. is a company that supplies some innovative products, some of which are shown below.

And its customers include the Department of Defense, Department of Homeland Security, U.S. Government intelligence agencies, NASA, aerospace contractors and commercial telecommunications and wireless customers.

There are many other such companies which specialize in surveillance, intelligence gathering, reconnaissance avionics , training devices and navigations products like Smiths Detection, Siemens. Honey Well, General Atomics etc and I am sure all these companies are doing equally well financially. Given the paranoia with which we now live with.

The elimination of Osama and its impact on the world terrorism, I am sure is a moment of joy for people all around the world. But  if there is anyone who is disappointed with the assasination of OSAMA BIN LADEN, its the heads of  these companies. The sales of these companies have been fueled by the mental strains and anxiety which he has installed into the minds of scores of people all across the world else how can you explain the rapid growth of these companies in this decade ?

There are basically two thoughts which are on my mind right now. Firstly, is this the end of the rapid growth of these defense companies? Can various countries cut their defense budgets and spendings now? Will the sales of companies like L-3 reach a plateau? I don’t know how much of a financial impact will the assasination of Osama have on these companies but I am sure if we keep winning such battles against terrorism we will eventually send the companies in this sector into a bigger recession and I hope to live that day.

Secondly, Have you heard of the term hedging?

 Hedging is the practice of taking a position in one market to offset and balance against the risk adopted by assuming a position in a contrary or opposing market or investment. – Wikipedia

I wish the people who invested in such companies a big congratualation cause I am sure they made some good money.



Posted on May 11, 2011, in Economics, organizations, Terrorism and tagged , , , , , , , . Bookmark the permalink. Leave a comment.

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