On the radar: What to watch in the weeks ahead
(Fortune Magazine) -- Lockheed Martin tries to buzz buyers
The F-35 Joint Strike Fighter is scheduled for its maiden flight in November, and officials from around the world will gather in Fort Worth to watch. Lockheed Martin (Charts) CEO Robert Stevens is hoping they'll have their check-books ready. The U.S. and eight of its allies have already committed $40 billion to the program, which is projected to be the most expensive in Pentagon history at $276.5 billion through 2027. But while the U.S. has given Lockheed a green light on production, the Allies have yet to commit. The F-35's $45 million pricetag - some 65% less than Lockheed's ultra-expensive F-22 - is its selling point. But Lockheed needs a large volume of orders, or it will have to raise the price per plane, entering what defense analysts call the "death spiral." Commitments are due from the Allies by the end of the year.
Mountains of debt
Record money is flowing into private-equity deals. But with the economy slowing, will bond buyers have an appetite for the debt that's being used to finance these takeovers? For a hint, keep an eye on the case of food-service giant Aramark (Charts), which is expected to issue $2 billion of paper in November to pay for the $8.3 billion multi-firm buyout led by CEO Joseph Neubauer. It's a preview of the offerings for the $33 billion HCA (Charts) and $27 billion Kinder Morgan (Charts) buyouts, which will start being issued later this year. Moody's has already downgraded Aramark's debt. If, as analysts predict, investors balk at paying full price, expect to see higher yields and more equity in future deals.
On Nov. 7, the power of eminent domain may be dealt a blow. Ballot initiatives in ten states, including Florida and California, would limit the ability to seize property to give to private developers. Only the power to seize for public purposes would remain. The measures are expect-ed to pass, in part, because states aren't fighting them. Why not? Right now states are selling an unprecedented $25 billion in assets on land seized for public use, like highways and housing projects. Seizures for public use aren't expected to slow. Why give away what you can sell?
The Futures market
Nov. 4 Bids for chipmaker Freescale are due. Can anyone top Blackstone's $17.6 billion offer, the biggest tech buyout ever proposed?
Nov. 9 Sweden's H&M debuts a line by Dutch designers Viktor & Rolf--good publicity as the hot retailer launches new stores around L.A.
Nov. 12 The Asian Pacific Economic Cooperation summit begins in Vietnam. The country hopes to join the WTO; Congress may upgrade its trade status this month.
Nov. 19 Wal-Mart ends an age-old practice: layaway. It hopes shoppers will use its new bank (if regulators grant approval) for credit rather than wait to buy.