Investing in the Mars Success

August 16th, 2012
in contributors

Article of the Week from Investing Daily

by Chad Fraser, Contributing Editor, Investing Daily

Early Monday morning, NASA’s $2.5-billion Curiosity rover made history as it streaked through the Martian sky at 13,200 miles per hour. The target: a crater that mars-curiosity-photo-of-mountainsSMALLwas once thought to be a place where rivers and streams flowed. NASA scientists are now priming the rover’s systems to start up in the next few weeks.

It was just the seventh successful landing on Earth’s nearest neighbor. By coincidence, the final approach of the Curiosity rover, from the time it entered the atmosphere to touchdown, was referred to by NASA scientists as the “seven minutes of terror” because any small glitch during that time would turn Curiosity into a very expensive piece of space junkClick on picture for larger image of photo taken by Curiosity rover.

Follow up:

A number of big U.S. and international companies were involved in the Curiosity rover project, and they all hope to benefit from its success, especially as potential customers see their hardware perform in the Martian atmosphere—one of the harshest environments imaginable. Here’s a look at three companies that made big contributions.

Siemens Provided the Building Blocks for the Curiosity Rover

One of the most important components was the software used to design it all, and that came from Siemens (NYSE: SI), Germany’s leading engineering company.

Using the company’s product lifecycle management software, NASA engineers were able to design and test the Curiosity rover before putting a single piece of it together. That helped them get a sense of how the device would perform throughout its mission and kept them from having to build unnecessary prototypes.

“They’ve been planning this for 8 to 10 years, and it landed within a minute of when they said it would,” said Tim Nichols, a managing director of marketing for Siemens in a Wall Street Journal article.

The stock has struggled recently, because the company has seen a significant drop in orders—particularly large orders at its energy business—as a result of the weaker economy, particularly in Europe and the U.S. In response, Siemens recently launched a broad restructuring program that involves closing plants, laying off workers and reorganizing its management structure. It expects these cutbacks to lower its overall costs by 30% by 2015.

General Dynamics Keeps the Curiosity Rover Connected to Earth

General Dynamics (NYSE: GD) makes the transponders that are the rover’s communication link back to Earth.

The company’s Information Systems and Technology business has a long-standing relationship with NASA. In addition to the work it did on Curiosity, General Dynamics is now working onupgrading the agency’s network for communicating with satellites in Earth’s orbit. This deal, which General Dynamics signed in 2010, is worth $642 million and expires in 2017.

General Dynamics is best known for its weapon systems, including rockets and the machine guns on the F-16 fighter and Lockheed-Martin’s (see below) F-35 Joint Strike Fighter, which is currently under development.

But the company’s military expertise can be used in a range of other fields, and it is taking advantage of this to diversify its business. For example, General Dynamics also makes theGulfstream, one of the world’s best-known business jets.

In addition, General Dynamics’ marine division is a leading U.S. shipbuilder. It makes destroyers and submarines for the U.S. Navy, as well as tankers for BP and Exxon, and container ships for a wide variety of clients.

The stock has mostly moved sideways in the last year, as investors worry that cuts to military spending around the world will hurt General Dynamics’ profits. But the dividend is attractive: Quarterly payments of $0.51 a share yield 3.24% on an annual basis.

Lockheed-Martin Keeps It Cool

Without Lockheed-Martin’s (NYSE: LMT) heat shield, Curiosity would have been reduced to cinders well before it hit the Martian surface. The outer casing the company made for Curiosity also protected it from radiation and other damage during the 352-million-mile trip from Earth to the Red Planet.

Like General Dynamics, Lockheed’s main business is defense, but it’s more heavily focused on air- and spacecraft. In its latest quarter, the aeronautics and space divisions provided roughly half of its overall revenue. Its Electronic Systems and Information Systems & Global Solutions businesses supplied the rest.

Lockheed’s F-35 Joint Strike Fighter program has been heavily criticized for cost overruns and delays, with some countries cutting their orders and others considering canceling altogether. For now, though, Lockheed’s financial performance continues to be strong. In the latest quarter, earnings rose 4.4%, to $2.38 a share, beating analysts’ expectations of $1.91 a share by a wide $0.46 margin.

The stock has also performed well, despite concerns about cuts to military spending around the world. Lockheed shares are up 25.6% in the past year. Like General Dynamics, it also pays an attractive dividend. The annual rate of $4.00 a share yields 4.49%.

What do you think of this article? Please post your feedback in the “comments” section below!

Note: GEI News has some additional detailed pictures of Mars.

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