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Show 'ilJ.'a?'1, MILITARY ELECTRONICS FIRMS ON UPSWING Electronic weaponry proved its mettle met-tle in the crises in Lebanon and the Falkland Islands. The aircraft and missiles used in these confrontations all require enormous amounts of electronic components and systems. In the future, ground equipment as well as space systems will also figure importantly in these battles. In order to offset the rapid Soviet buildup build-up in military arms and manpower, the U.S. is placing heavy emphasis on expanding expan-ding its technological superiority in electronic elec-tronic warfare equipment and highly sophisticated communications networks. Consequently, the staff of Babson's Reports believes that the fiscal 1984 defense budget will include substantially substantial-ly most of the requests for military electronics. elec-tronics. Moreover, further marked growth of this sector is forecast over the next several years. Through the end of the decade, significant increases are already programmed. America's six-year defense plan revolves around marked improvements in command control and communications communica-tions systems plus intelligence networks (C3I) and Electronic Warfare hardware and computer software. There will also be an acceleration in the timetable to upgrade our present outdated equipment, equip-ment, providing a huge market for ' suppliers. There are several in-depth producers of C3I and EW equipment and systems which will be the beneficiaries of our military preparedness. This article pinpoints pin-points the specific areas and a few of the attractive companies recommended for investment. EW SYSTEMS AND KEY COMMUNICATION NETWORKS The Electronic Warfare Systems sector sec-tor is regarded as the fastest growing military electronics market. This up-to-date equipment includes noise and deception jammers (accounting for 36 percent of EW hardware) such as electronic elec-tronic countermeasures. Accelerating also is demand for electronic counter- coumermeasurers wmcn are devices lor jamming the above-mentioned countermeasurers of the enemy. Other EW systems used for intelligence, reconnaissance, recon-naissance, and surveillance provide information in-formation for the location and sources of hostile electromagnetic signals. Command, control, and communications communica-tions networks plus intelligence (C3I) is another area with outstanding growth prospects and is critical to defense against nuclear attack. These systems receive information (via advanced electronic elec-tronic devices) which is then processed through computers and displayed at a command center. The U.S. maintains a substantial lead in aircraft equipped with C3I equipment and advanced electronic components. FAST GROWTH FOR HARDWARE AND SOFTWARE The average annual growth rate for v the aforementioned EW systems for the 1981-85 period is estimated at 17 percent and 20 percent depending on the type of equipment. Funding for fiscal 1984 is expected ex-pected to reach $3.4 billion, rising to about $4 billion by 1986! The market for C3I is expected to grow to $3.8 billion for fiscal 1983 (ending Sept. 30 from $2.8 billion (in fiscal 1981) and is projected at around $4.3 billion by 1986. A huge slice of the C3I market is taken by computer software which in the intelligence in-telligence sector accounts for $1.8 billion. Experts predict that the development of a new high-level computer language (Ada) will contribute significantly to the dynamic growth of military software after 1984. SELECT RECOMMENDATIONS Our current candidates for purchase are: (1) E-Systems (one of the world's leaders in systems for airborne intelligence in-telligence and reconnaissance as well as electronic countermeasurers); and (2) Raytheon (a major prime contractor, producing tactical air defense missiles, defense electronic systems for ground, air, and shipboard use, 'plus countermeasures and sonar equipment.) E-Systems (ESY) is traded on the (NYSE) near 56, and Raytheon is selling near 53 (NYSE). |