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BAE's Deal May Be Worth $4 Billion

July 05, 2002|From Bloomberg News

LONDON -- BAE Systems, Europe's biggest weapons contractor, said its share of an order to make radios for the U.S. armed forces may be worth as much as $4 billion over the 20-year program, more than previous estimates.

BAE is in a group of companies led by Boeing Co. that has been chosen to supply new radios allowing troops to transmit voice, data and video information more quickly, it said. The U.S. Defense Department has said orders may be worth $2 billion through 2008, the program's first phase.

"BAE is winning U.S. contracts because it has built up a significant presence there," said Nick Cunningham, an analyst at Schroder Salomon Smith Barney who rates the stock "outperform."

BAE has transformed itself from a British-focused aerospace company into an international defense systems business. Last year, it had North American sales of $3.9 billion, and the Pentagon is its biggest customer.

The value of the new order to BAE, if options are exercised, "could exceed $4 billion over the life of the program," the company said.

The first phase is expected to deliver more than 100,000 radios for the Army and Air Force, BAE said. The radios will go into service in 2008.

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