$AMZN announced the opening of The Spheres, its newest Seattle HQ buildings which have no enclosed offices or conference spaces. The Spheres feature treehouse meeting rooms, river and waterfall features, a four-story living wall, and epiphytic trees. The project created more than 600 full-time jobs, and is part of a more than $4Bil investment.
$NOC continues to expect that capital expenditures will remain elevated in 2018 and 2019 before starting to return to a new normal that reflects a larger business. For 2018, the company does have additional CapEx as well as $100-150MM in costs from incremental interest and transaction cost related to its pending acquisition of $OA.
For 2018, $NOC expects Technology Services sales to be in the mid $4Bil range, with an operating margin rate of about 10%. Lower 2018 revenue is primarily due to expected declines in the KC-10 and JRDC programs. Lower revenue for these programs is being partially offset by growth in other programs.
For 2018, $NOC expects Mission Systems sales to grow to the mid to high $11Bil range with an operating margin of about 13%. Primary revenue growth drivers include continued ramp-up on combat avionics and communications programs, including F-35 sensors, SABR radar, and infrared countermeasures.
For 2018, $NOC expect Aerospace Systems to grow at top line at a high single-digit rate to the high $12Bil range. Growth in restricted activities will continue to be a major driver of revenue growth, along with continued ramp-up on the F-35 program. The company expects 2018 operating margin at Aerospace Systems to be in the low to mid 10% range.
$NOC currently expect the $OA transaction to close in 1H of this year. In late November, $OA shareholders overwhelmingly approved the terms of the transaction. The FTC is reviewing the proposed transaction in the U.S. in consultation with the DoD and $NOC notified the European Commission on Jan. 18 under the simplified procedure notice.
For 2018, $NOC expects sales of about $27Bil and EPS of $15.00-15.25. The company predicts segment operating margin in low-mid 11% range and operating margin of about 12%. $NOC sees effective tax rate of about 19.5%, capital expenditures of about $1Bil and free cash flow in the range of $2.0-2.3Bil.
$NOC's Aerospace Systems sales for 4Q17 rose 5% year-over-year, due to growth in Manned Aircraft and Autonomous Systems. Mission Systems sales grew 6%, on higher volume for Sensors and Processing and Advanced Capabilities programs. Technology Services sales slid 1% on lower volume for System Modernization and Services and Advanced Defense Services.
$NOC's operating income for 4Q17 decreased to $767MM from $831MM last year. The decline is primarily due to higher transaction costs from pending acquisition of $OA and deferred state tax expense from discretionary pension contribution. It also includes changes in contract mix at Aerospace Systems and Mission Systems.
$NOC reported a drop in 4Q17 earnings due to higher tax expenses from Tax Cuts and Jobs Act enactment and $500MM discretionary pre-tax pension contribution related to the write-down of deferred tax assets. Net income fell to $178MM or $1.01 per share from $525MM or $2.96 per share last year. Sales rose 4% to $6.6Bil. Adjusted EPS was $2.82.
$AMZN has chosen 20 metropolitan areas as proposed locations for HQ2, its second headquarters. These are Atlanta, Austin, Boston, Chicago, Columbus, Dallas, Denver, Indianapolis, Los Angeles, Miami, Montgomery County, Nashville, Newark, New York City, Northern Virginia, Philadelphia, Pittsburgh, Raleigh, Toronto and Washington DC.
$AMZN reviewed 238 proposals from across the US, Canada, and Mexico to host HQ2, its second headquarters in North America. The company has chosen 20 metropolitan areas for the next phase of the process. $AMZN expects to make a decision in 2018. The company plans to invest over $5Bil and create as many as 50,000 jobs at HQ2.
$AMZN said Amazon Music Unlimited will become available in Australia and New Zealand starting February 1, giving users access to a catalogue of more than 45MM songs and hundreds of playlists and personalised stations. New subscribers can sign up for a free 90-day trial of Amazon Music Unlimited for a limited time.
Amazon Web Services, Inc., an $AMZN company, announced that Comcast Cable has selected AWS as its preferred public cloud infrastructure provider. Comcast Cable will expand its use of AWS by migrating material workloads and building new applications on AWS.
