SAIC FALLS AFTER LOSING LARGEST CONTRACT TO LOCKHEED MARTIN --- WASHINGTON MOVER
By Nick Taborek June 18, 2012 4:16 PM EDT
SAIC Inc. (SAI) fell the most in seven months after losing its largest government contract to Lockheed Martin Corp. (LMT)
Shares of SAIC, based in McLean, Virginia , declined 3.1 percent to close at $11.86 in New York . They fell as much as 5.2 percent, the most since Nov. 9, 2011, in earlier trading.
Lockheed Martin, based in Bethesda, Maryland, on June 15 beat SAIC for a Defense Department contract valued as high as $4.6 billion to operate a communications network known as the Global Information Grid.
The contract is for as long as seven years if all options are exercised, and its estimated value for the three-year base period is $1.91 billion, Alana Casanova, a spokeswoman for the Defense Information Systems Agency , said today in an e-mail.
SAIC, the eighth-largest contractor on the Bloomberg Government top 200 list, has received at least $3.6 billion for the work since 2001, according to data compiled by Bloomberg.
It was SAIC’s biggest contract with the U.S. government, according to Stifel Nicolaus, a St. Louis-based investment bank. The firm cut its fiscal 2014 earnings estimate to $1.26 a share from $1.38 a share and maintained its hold rating on the shares.
SAIC will probably protest the contract loss, Michael Lewis , an analyst at Lazard Capital Markets in New York, said yesterday in a note to clients.
“We have seen protests turn the tables on a winning firm before,” Lewis wrote. “While it is still too early to make this call, there remains a possibility that this contract could make its way back” to SAIC.
To contact the reporter on this story: Nick Taborek in Washington at ntaborek@bloomberg.net
To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net
