UPDATE 6-Bombardier delays C-Series flight, cuts train unit jobs

Comments (2)
Venerability wrote:

This is really a pretty good report, and I think most who follow the company will be satisfied with it.

First of all, analyst consensus as of a few days ago was 10 cents, not 11, so this is a 20 percent beat on the bottom line.

And a very tiny miss in revenues, which was broadcast at the last earnings call. Important metric is a big build in backlogs. And judging by recent news about contracts for which they are frontrunners, those backlogs may dramatically increase again in the next quarter and for 2013 as a whole. Hints of big new orders possible from South Africa, Saudi Arabia, India, China, Malaysia, Indonesia . . The whole world is stimulating via transportation projects!

Backlog may also increase as a result of new contracts due to Hurricane sandy damage, since Bombardier is the main supplier to the New York subway system, Boston subway system, New Jersey transit, Maryland rail, and Amtrak’s Acela on the Eastern corridor.

As expected and also broadcast widely, they are delaying their first C-series flight until it’s safe to make it. But since they are doing so much of their testing via simulations, we will probably get a steady stream of news about successful simulated flights from now on in. It’s already started, in fact, and is being widely glommed onto by the aerospace press around the world – which so far is highly impressed. I think they will stress that in their conference call this morning at 10.

Another piece of very good news, IMO, is their deciding to cut train division jobs in Europe, where the division is based, and – probably – shortly down the road announce that they are bringing them either to Canada, satisfying their restive labor force there, and/or to Plattsburgh, as a gift to Andrew Cuomo, an immense backer of the proposed high speed rail line between Manhattan and Toronto, Montreal, and Quebec City, with a possible spur to Buffalo and Niagara Falls.

I know some don’t like high speed rail, but it’s coming to both the US and Canada very soon now. C-series aside, Bombardier is going to have a steady growth in positive name recognition when – not if, when, IMO – it gets most of the work on the New York-Canada line and possibly at least some of it on Las Vegas-Los Angeles-San Francisco, which is also probably now on tap at last.

Nov 07, 2012 8:14am EST  --  Report as abuse
Venerability wrote:

I tried to get into the Comments and Questions queue at the conference call, but there were so many questions, I lost battery power on two phones before I made it to the head of the line!

As per usual, commentary has been skewed to the negative side with this company, NOT representing either what the majority of shareholders think nor what the majority of still very, very Bullish analysts think.

On the C-series obsession especially, Bombardier is doing so much better with its march to first flight than either Boeing or Airbus did with their recent launches, it should be lauded and applauded, not the opposite.

What I would have pointed out, if I had gotten into the Comments queue, is not only that technical aerospace people around the world have been consistently impressed with the C-series as it goes through its continuing simulated testing program, as I said above, but also that some shareholders and analysts remember very well what happened to Sukhoi last May, only six months ago.

Would Bombardier and its shareholders and stakeholders rather have a first flight that is safe and efficient and encourages orders for many years to come? Or would it rather move too soon and become Sukhoi?

Some of the press comments I heard were downright silly! Do they think Bombardier is dealing with one or two suppliers in North America – which is impossible nowadays? They are dealing with multiple suppliers – dozens – in countries all over the globe. This is a massive international project, as were Boeing’s and Airbus’s before it. Again, Bombardier is doing extraordinarily well, especially considering it is the Underdog on so many counts.

I also would have asked about additional revenues that might come in pretty much immediately on post-Hurricane Sandy rolling stock and maintenance orders, which I don’t think anyone did.

I might have asked about joint worldwide marketing efforts on the private jet side with Berkshire.

I might have asked about the Derby Crossrail controversy in the UK, which has heated up markedly lately and may now possibly result in the contract or big parts of it being taken away from Siemens and given to Derby.

I wouldn’t have asked – although everyone knows it may be coming – about Canada’s possibly asking for major Bombardier orders, including orders for the C-series, as a tacit quid pro quo for approval of big Energy takeovers in Canada by certain foreign powers.

In short, as both a long-time financial journalist and a former director of investor relations, I am still pretty much shocked at how easily the press is swayed by opinions and commentary hand-fed to them by those who either have Short positions or are working closely with those who do.

The financial press needs to become much more independent and skeptical and ask for the opinions of Bulls as well as Bears every single time it writes or speaks about this or any other “controversial” company and its stock.

Nov 07, 2012 12:05pm EST  --  Report as abuse
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