Tuesday, May 16, 2006

Insider Competition in the Defense Industry

While there aren't any smoking emails mentioned in this case, where else can we spot insiders if not in the defense industry, an industry where securing government-backed contracts, or teasing military decion makers with the latest technologies ensures the long-term existence of the business itself? From the article :



"Boeing has been under investigation for improperly acquiring thousands of pages of rival Lockheed Martin's proprietary documents in the late 1990s, using some of them to help win a competition for government rocket-launching business. The government stripped Boeing of about $1 billion worth of rocket launches for its improper use of the Lockheed documents."



Boeing and Lockheed Martin remain the key players in the defense industry, ensuring their portfolio of services (cyberwarfare, theater warfare, grid networking compatibility etc.) remain competitive. I once said that during the Cold War, the tensions between the U.S and the Soviet Union used to be the driving force of progress and innovation, these days, terrorism is the driving force and the "excuse" for military and intelligence spending. And while NASA's budget has been decreasing with the time, the next major space innovation wouldn't come from NASA, but from the commercial sector.



What's the bottom line? A minor short-term effect, and long-term business continuity for sure as "Boeing shares fell $1.76, or 2 percent, to $85.25 in morning trading on the New York Stock Excange."