Rockwell Collins Inc. COL collaborated with OneWeb Ltd. to become the exclusive supplier of satellite communication (“SATCOM”) terminals for the latter’s global aviation high-speed broadband service. Additionally, Rockwell Collins will serve as an official Value Added Reseller of OneWeb’s service.
As per the terms of the agreement, Rockwell Collins will use its electronically scanned array (“ESA”) technology for the development and certification of SATCOM terminals. ESA antennas ensure that the aircraft is connected during the flight via reconfigurable antenna patterns and rapid beam movements.
The antenna’s design will provide cost benefits to the airlines as both its size and weight are only a fraction of those of the traditional airborne SATCOM antenna. It thus ensures lower consumption of fuel, leading to reduced costs for the airlines. Moreover, given the antenna’s miniscule size, it has the capability to support services beyond the field of aviation. Hence, the collaboration with OneWeb will open floodgates of opportunities for Rockwell Collins beyond aerospace.
OneWeb is presently building a constellation comprising over 600 satellites. It is said that once launched, it will be one of the largest telecommunications constellations in orbit. Moreover, it will be capable of providing high-speed broadband service to people all over the globe.
In another business development, Rockwell Collins won a seven-year contract to provide oceanic data link services to the Federal Aviation Administration to ensure real-time and efficient data communication between pilots and air traffic controllers. Airlines stand to benefit immensely from this deal due to increased cost savings and safety.
Rockwell Collins’ continued focus on research and development (“R&D”) enables it to clinch lucrative deals to keep its top line ticking. Under its R&D program, the company invested $231 million during first-quarter fiscal 2015, up 5.5% year over year. Also, the company raised its projection for capital investment in fiscal 2015 to about $1 billion from the previous guidance of $950 million.
Rockwell Collins’ relentless focus on R&D will ensure a continuous stream of contracts and enable it to achieve its revised earnings target for fiscal 2015. In its first-quarter fiscal 2015 earnings call, the company raised its guidance for fiscal 2015 earnings to the range of $5.10–$5.30 per share from its previous expectation of $4.90–$5.10 on projected total revenue of $5.2–$5.3 billion.
Rockwell Collins currently holds a Zacks Rank #2 (Buy). Other favorably-ranked stocks in the same sector include Spirit AeroSystems Holdings, Inc. SPR, TransDigm Group Incorporated TDG and GenCorp Inc. GY, each carrying the same Zacks Rank as Rockwell Collins.
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