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Red flag on Booz Allen IPO

by YankeeJim | November 5, 2010 at 01:40 pm

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Watch out investors, the government contracting market is going south, meaning, a reduction in the market size due to government spending cutbacks.

Carlyle and Booz Allen want to get something while they still can. Any firm that does the majority of its business with only government customers should be highly suspect, IMO.

http://www.washingtonpost.com/wp-dyn/content/article/2010/11/05/AR2010110508550.html?wpisrc=nl_politics

“Booz gets 98 percent of its sales from U.S. government contracts in areas ranging from defense to health care. The filing showed that revenue increased 18 percent to $5.12 billion in the fiscal year ended March 31. Booz Allen reported a $25.4 million profit, versus a loss in the year-earlier period.”

“Booz Allen Hamilton seeks IPO to help repay debt

By Cecile Vannucci

Friday, November 5, 2010; 12:44 AM

Booz Allen Hamilton, the McLean consulting firm taken private by Carlyle Group in 2008, is seeking an initial public offering that might hand the buyout firm a 241 percent paper profit on its investment.”

The investor “watch out” should extend to all government contractors.

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YankeeJim

at 07:53 on November 6th, 2010

They will drop like a rock.

James14 (not verified)

at 06:40 on November 8th, 2010

Booz has been eating their seed corn for a couple of years now, and the signs of the fall are starting to show. In May they won a landmark FAA contract by being the lowest bidder ... www.boozallen.com/news/43164502 Their performance has been so poor that the FAA just awarded an identical contract to TASC. www.prnewswire.com/news-releases/tasc-inc-wins-827-million-se-2020-contract-to-support-faas-nextgen-program-105445703.html It's a nice way of terminating the contract with Booz. Notice, TASC's bid was 18% higher for the same piece of work. One must wonder how much of Booz's backlog of work was bid a rates so low that they will fall off a cliff in a year or two due to poor performance. Of course, by then, the banksters will have made their $ and moved on to their next "project". Isn't private equity great?!?!