Data Link Solutions, LLC or DLS, jointly owned by Rockwell Collins Inc. (COL) and London-based BAE Systems plc, and ViaSat Inc. (VSAT) have won contracts worth $166.3 million each, from the U.S. Department of Defense (DoD). Both these contracts are modifications to multiple-award contracts awarded earlier.
Per the agreement, DLS will provide systems engineering and integration support to the multifunctional information distribution system (MIDS) low volume terminal (:LVT) and the MIDS joint tactical radio systems (:JTRS) terminal. This activity will take place in Wayne, N.J. and Cedar Rapids, Iowa and is scheduled to be completed by 2015.
Rockwell Collins and BAE Systems formed DLS to upgrade the next generation Link 16 applications. Link 16 tactical data link is the standard by which other systems are computed for airborne positional awareness. The company supplies Link 16 terminals, software, logistics and support services for land, air and sea-based platforms. The product line includes the joint tactical information distribution system (:JTIDS) Class 2 family, the MIDS LVT and LVT-3 fighter data link (FDL), and the URC-138 link 16 terminals. To date, the company has delivered more than 3,000 Link 16 systems.
The MIDS LVT is a low-cost fighter terminal, having flexibility and open-architecture design. It offers ground, airborne and maritime link that provide simultaneous co-ordination of armed forces and positional awareness in battlefield operations.
The MIDS JTRS is a 4-channel radio, used for complex Link 16 waveform and capable of three additional communication protocols including the Airborne Networking Waveform. This terminal has the competence to host and offer required computer processing for routing and platform-specific applications. This feature would lower the integration cost into host platforms.
Rockwell Collins as evident from its record book has a strong contract pipeline. Recently, the company won a $44.5 million foreign military sales contract from the U.S. DoD to modernize three of The Boeing Company’s (BA) KC-135R aerial refueling tankers for the French Air Force. Given the cutbacks in the U.S. defense budget leading to a decline in domestic orders, the foreign contracts will offer a stable revenue stream for the company.
Moving forward, Rockwell Collins’ effort to introduce cutting-edge technology applications in military and aerospace programs will allow it to remain well-positioned amidst the challenging defense environment.
Rockwell Collins currently has a Zacks Rank #3 (Hold). In the near term, we would advise investors to accumulate its Zacks Rank #1 (Strong Buy) peer Astronics Corporation (ATRO).
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