Shares of Lockheed Martin Corp. fell Monday, as investors grew wary of the potential economic fallout from the destruction of the space shuttle Columbia.
Lockheed, based in Bethesda, makes the external fuel tanks used by the shuttle during liftoff, and runs a joint venture with Boeing Co. that makes, among other things, the heat-resistant tiles used on the shuttle.
The two are at the center of NASA's investigation into the Columbia disaster.
Shares of Lockheed were down 2.6 percent, or $1.30, at $49.75 Monday afternoon on the New York Stock Exchange.
The space shuttle represents only a fraction of the annual sales for Lockheed, the nation's largest defense contractor and the maker of jet fighters and other military equipment.
But analysts said the high profile Columbia disaster could affect Lockheed as investors worry about a possible halt to NASA's space program and what an investigation might uncover.
"People are putting two and two together for the potential delay in the program and any liability that could come from this," said Eric Hugel, an analyst with Stephens Inc. in New York.
Lockheed's stock has risen steadily over the past several years, benefiting in part from a post-Sept. 11 emphasis on homeland security and the military buildup associated with the campaign in Afghanistan and the possible war with Iraq.
The company is also building the Joint Strike Fighter, a next-generation jet fighter contract that could be worth $200 billion over four decades.
Company spokesman Meghan Mariman said Lockheed was not focused on any financial damage it could experience because of the loss of Columbia.
"Right now, we're not concerned with our operating profit from the shuttle, our focus is helping NASA with the investigation," Mariman said Monday.
The company's space systems segment accounted for roughly $7.4 billion of the $26.5 billion in sales Lockheed posted in 2002. Much of that is from the company's commercial rocket and satellite business.
The space shuttle represents only about 3 percent of Lockheed's annual sales, Mariman said.
But Columbia's external fuel tank, manufactured at a Lockheed plant in New Orleans, has become a major part of NASA's investigation. A patch of foam insulation peeled off during the shuttle's launch Jan. 16, striking the left wing of the craft.
A cause for the accident has not been determined, but NASA official Bill Readdy said Monday that the leading theory is the insulation dislodged heat resistant tiles, making the shuttle vulnerable to the high temperatures it faced while re-entering the earth's atmosphere.
The tiles are made by the United Space Alliance, the Houston-based joint venture Lockheed established with Boeing in 1995 to provide services and manufacture parts for the shuttle program. Lockheed makes about $50 billion in operating profit each year from the United Space Alliance, Mariman said.
Analysts said Lockheed, Boeing and other defense contractors have already been in a minor downturn with investors questioning if the stocks are overvalued. Lockheed, for example, warned in its Jan. 24 earnings report that 2003 earnings will fall short of expectations.
Jeff Pittsburg of Pittsburg Research said Monday's sell-off could be largely attributed to the emotional effect of the Columbia disaster from investors already wary of the stock.
"It's a reaction you have because you don't know what is going to happen," Pittsburg said. "That indecisiveness is putting some short term pressure on a group that's already been correcting."
Others said Lockheed's space contracting business could actually emerge from the incident stronger.
There may be a pause in space shuttle launches, said John Kutler of Quarterdeck Investment Partners, but there has been little talk of scrapping the program altogether.
NASA also may have to spend heavily to make up for lost time once the pause ends, he predicted.
"We will continue to have manned space flight," Kutler said. "There may be a dip in the near term as programs get put on hold, but there is often a disproportionate amount that gets spent during the catch-up period."
Lockheed, based in Bethesda, makes the external fuel tanks used by the shuttle during liftoff, and runs a joint venture with Boeing Co. that makes, among other things, the heat-resistant tiles used on the shuttle.
The two are at the center of NASA's investigation into the Columbia disaster.
Shares of Lockheed were down 2.6 percent, or $1.30, at $49.75 Monday afternoon on the New York Stock Exchange.
The space shuttle represents only a fraction of the annual sales for Lockheed, the nation's largest defense contractor and the maker of jet fighters and other military equipment.
But analysts said the high profile Columbia disaster could affect Lockheed as investors worry about a possible halt to NASA's space program and what an investigation might uncover.
"People are putting two and two together for the potential delay in the program and any liability that could come from this," said Eric Hugel, an analyst with Stephens Inc. in New York.
Lockheed's stock has risen steadily over the past several years, benefiting in part from a post-Sept. 11 emphasis on homeland security and the military buildup associated with the campaign in Afghanistan and the possible war with Iraq.
The company is also building the Joint Strike Fighter, a next-generation jet fighter contract that could be worth $200 billion over four decades.
Company spokesman Meghan Mariman said Lockheed was not focused on any financial damage it could experience because of the loss of Columbia.
"Right now, we're not concerned with our operating profit from the shuttle, our focus is helping NASA with the investigation," Mariman said Monday.
The company's space systems segment accounted for roughly $7.4 billion of the $26.5 billion in sales Lockheed posted in 2002. Much of that is from the company's commercial rocket and satellite business.
The space shuttle represents only about 3 percent of Lockheed's annual sales, Mariman said.
But Columbia's external fuel tank, manufactured at a Lockheed plant in New Orleans, has become a major part of NASA's investigation. A patch of foam insulation peeled off during the shuttle's launch Jan. 16, striking the left wing of the craft.
A cause for the accident has not been determined, but NASA official Bill Readdy said Monday that the leading theory is the insulation dislodged heat resistant tiles, making the shuttle vulnerable to the high temperatures it faced while re-entering the earth's atmosphere.
The tiles are made by the United Space Alliance, the Houston-based joint venture Lockheed established with Boeing in 1995 to provide services and manufacture parts for the shuttle program. Lockheed makes about $50 billion in operating profit each year from the United Space Alliance, Mariman said.
Analysts said Lockheed, Boeing and other defense contractors have already been in a minor downturn with investors questioning if the stocks are overvalued. Lockheed, for example, warned in its Jan. 24 earnings report that 2003 earnings will fall short of expectations.
Jeff Pittsburg of Pittsburg Research said Monday's sell-off could be largely attributed to the emotional effect of the Columbia disaster from investors already wary of the stock.
"It's a reaction you have because you don't know what is going to happen," Pittsburg said. "That indecisiveness is putting some short term pressure on a group that's already been correcting."
Others said Lockheed's space contracting business could actually emerge from the incident stronger.
There may be a pause in space shuttle launches, said John Kutler of Quarterdeck Investment Partners, but there has been little talk of scrapping the program altogether.
NASA also may have to spend heavily to make up for lost time once the pause ends, he predicted.
"We will continue to have manned space flight," Kutler said. "There may be a dip in the near term as programs get put on hold, but there is often a disproportionate amount that gets spent during the catch-up period."