Diamond: Lockheed Martin: Money in mayhem
Governments have a tendency to cut back on military spending when there’s no immediate threat on the horizon, but the moment you get the Russian bear showing its claws or the Chinese looking hungrily over the water at Taiwan, the mood changes rapidly.
With all due respect to the scriptwriters of Top Gun: Maverick, you’d need a lot more than Tom Cruise in an out-of-date clunker if the other side has state-of-the-art fighters, a point that your pilots are likely to make quite volubly.
Lockheed Martin raised expectations after strong demand for its F-16 and F-35 fighter jets pushed year-on-year revenues up 9% to $18.1bn in the second quarter. F-35 deliveries to the US have resumed after a delay due to software issues, and it expects to meet its forecast of between 75 and 110 F-35s in 2024. Meanwhile it is investigating opportunities in the export market, with countries such as the Philippines, Thailand and Turkey expressing interest in some shiny new F-16s.
The US has donated a number of Lockheed Martin weapons to the Ukrainians, such as the high-mobility artillery rocket system, as well as Javelin and Pac-3 missiles, but the real impact of the conflict has been to emphasise the importance of deterrence across the board.
The company has been working with the US Navy to develop cutting-edge AI software updates for destroyers intercepting missiles and drones in the Red Sea; confirming the principle that there’s nothing like a good old shooting match to speed up the pace of innovation.
Dog: Universal Music Group: High notes — and low
Shares in the world’s largest music group took an absolute pasting when it announced results a long way short of the double-digit growth the market had been used to, scaring investors with the thought that the golden age of streaming may be coming to an end.
Its revenue from subscriptions and streaming was up a mere 4%, and while it said that Spotify and YouTube had continued to grow strongly, it implied that Apple and Amazon had gone into reverse, while Meta had stopped licensing premium music videos from it as of May.
Universal’s results were far from a disaster, with total revenue up 9% in the quarter and adjusted earnings before interest, tax, depreciation and amortisation up 10%, and once the dust settles it may well appear that a 20% drop in the share price was something of an overreaction from the market.
The big highlight of the results was the performance of merchandising, up 44.6% year on year, which the company attributed to “strong touring activity”, a phrase that can loosely be interpreted as Taylor Swift dominating the globe and fleecing parents of preteen girls with deadly precision.
Universal has jumped on the AI bandwagon with a deal with a start-up called SoundLabs to create “official ultra-high-fidelity vocal models for artists using their own voice data for training”. Theoretically this means that the model could create a new Taylor Swift song using her actual voice without her ever having to go near a recording studio, thus freeing up plenty of time for Chiefs games and hanging with Travis. Presumably it could also create posthumous content, so bring on the new Frank Sinatra.
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