Boeing’s commercial jetliner business is going gangbusters. Its defense business isn’t. Whenever the fortunes of major business lines within a publicly traded company diverge like that, some bright investment analyst poses the question of why the stronger performer isn’t getting more of management’s attention. In Boeing’s case, the answer is simple — sometimes defense is up and commercial is down, sometimes it’s the other way around. Today’s situation, for instance, is almost the exact opposite of where the market stood after 9-11. Aside from complementary demand cycles, there are other reasons for keeping the enterprise firmly planted in both segments of the aerospace market: the fungibility of skills across segments, the similarity of business dynamics in each segment, the migration of military customers into commercial products and processes, the insulation of defense contractors from predator trading practices. The bottom line is that Boeing needs to remain a big player in the defense business to assure the long-term viability of its enterprise. I have written a commentary for Forbes here.
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