Northrop's $500 Million Earmark
by William Lauderback

Is the $500,000,000 earmark for Northrop Grumman in the Senate Supplemental needed to save this company?

Go to www.stockcharts.com and look up Northrop Grumman, ticker symbol NOC.

You’ll see that at the time of Katrina, Northrop’s stock was trading at about $54/share. After Katrina, it bottomed out at $52.17 on October 11, 2005. It traded as high as $71.37/share on April 24, 2006.

Northrop closed on May 1, 2006, just before the Supplemental vote at $67.24, up $0.34 on the day. Northrop’s Market Capitalization is $23.84 Billion. At the time of Katrina, Northrop’s Market Cap was about $19.15 Billion. In other words, since Katrina, Northrop’s Market Cap has exploded by $4.69 Billion, or a whopping 24.5% in just seven months.

And this company needs a $500,000,000 taxpayer bailout for its ship building division? The ship building division reported 1Q06 sales of about $1.1 Billion and a profit margin of 6%. That is down only slightly from the 7.1% margin the ship division posted in 1Q05. In other words, the ship division is doing just fine. Read it for yourself at: http://investor.northropgrumman.com/phoenix.zhtml?c=112386&p=irol-newsArticle&ID=847021&highlight=

The prudent investor, recognizing the strength of this great American company would have been wise to invest in Northrop right after Katrina artificially caused its stock price to slide slightly. That investor would have realized a gain of about 25% in seven months (an annualized return of about 43%!!!!!!)

Good luck to Senator Tom Coburn for his efforts in trying to remove the $500,000,000 earmark for Northrop from the Supplemental.

J. William Lauderback, Executive Vice President The American Conservative Union

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