Friday, June 03, 2005

War Machine Rolls On & On:
L-3 buys Titan

I know everyone is breathlessly waiting for a verdict in the Michael Jackson story and the following story isn't sensational or sexy but it is very telling of why war is profitable and maybe how to slow the machine down (not sure it could be stopped).
L-3 Communications bought Titan Corp today for 2 billion expanding it's defense-intelligence company.
L-3 earnings will increase 5% per share and Titan will increase 1.4% per share.
All of this despite both companies having been in legal trouble.
  • In March, Titan pleaded guilty to making illegal payments to officials in Benin and paid $28.5 million to the federal government to settle the matter.
  • Titan, which provides translators and interrogators used by the U.S. Army in Iraq, has also come into the spotlight for work at Iraq's Abu Ghraib prison, which became notorious for abuse of prisoners.
  • L-3 is also the subject of a federal investigation after one of its units supplied defective parts for emergency radios to locate downed military pilots.
Titans past legal trouble led defense giant Lockheed Martin to pass on a planned $1.66 billion acquisition of Titan. But hey so what, now Titan gets bought up for even more (once they cut a deal with the US government) . And so what if they were implicated in one of the worst scandals for the military. And so what if L-3 isn't doing right by downed pilots. You can still make money. War is profitable.

With over a dozen deals since 1997, L-3 is one of the leading defense contractors today. But who has heard of them? Yeah everyone knows of Haliburton but L-3? These companies and their legal travails need to become known as well as Haliburton. In fact holding stock in such companies needs to become a source of shame and ridicule. Maybe then we will see a light at the end of the Iraq war tunnel and keep our troops out of Iran.

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