Technology Stocks Surge on Positive Earnings Guidance and Department of Defense Contract

Strategic Insights -

Technology stocks rose significantly at the end of trading on January 3, 2012, driven by positive earnings guidance from Rambus Inc. (RMBS) and a major contract awarded to United Technologies (UTX) for the production of F-35 Lightning II aircraft engines. Rambus Inc. announced a two-weeks prior patent license agreement with Broadcom Corp. (BRCM), resolving outstanding claims between the two companies. United Technologies' Pratt & Whitney unit received a contract worth up to $1.12 billion for the production of engines, spare parts, and related services.

Key Takeaways:

  • Rambus Inc. raised its Q4 revenue guidance following a patent license agreement with Broadcom Corp., sending its stock up 3.9%.
  • United Technologies' Pratt & Whitney unit secured a $1.12 billion contract from the Department of Defense for F-35 Lightning II aircraft engines, spare parts, and related services.
  • The contract with Pratt & Whitney is part of a significant expansion in military technology spending, which is expected to boost technology stocks.
  • Rambus Inc.'s revised revenue guidance was likely a response to its patent license agreement with Broadcom Corp., which resolved potential claims worth millions of dollars.
  • United Technologies' Pratt & Whitney unit's contract win highlights the strategic importance of the F-35 program and its potential for growth in the military technology sector.
  • The rise of technology stocks was also driven by positive performances from MSFT, AAPL, IBM, and GOOG, which saw gains of 3.7%, 1.7%, 1.7%, and 2.9%, respectively.

Statistics:

  • Rambus Inc. stock rose 3.9% on January 3, 2012.
  • United Technologies' Pratt & Whitney unit received a $1.12 billion Department of Defense contract.
  • The contract is for the production of F-35 Lightning II aircraft engines, spare parts, and related services.
  • Rambus Inc.'s Q4 revenue guidance was revised upward due to its patent license agreement with Broadcom Corp.
  • United Technologies' Pratt & Whitney unit's contract win is the latest in a series of significant military technology contracts awarded in the past year.
  • The average daily gain for technology stocks on January 3, 2012, was 2.4%.

Sources:

  • MidnightTrader via COMTEX, January 3, 2012.
  • Comtex SmarTrend Alert, December 30, 2011 (RMBS).
  • Comtex SmarTrend Alert, December 30, 2011 (BRCM).
  • Comtex SmarTrend Alert, December 30, 2011 (UTX).
  • Comtex News Network, Inc. Copyright 2004-2012.