A Nervous Eye On Defense Firms

The End of the Mighty Post-9/11 Pentagon Budgets Could Put Big Weapons Projects Under Scrutiny and Industry Stocks in Retreat

For the makers of the military's ships and fighter jets, the boom times may be coming to an end. At least that's what some Wall Street analysts and recently sluggish defense contractor stock prices suggest.

In the face of a stubborn budget deficit fed by hurricane relief bills and rising war costs, the surge in defense spending following the Sept. 11, 2001, terrorist attacks is likely to level off, experts say. The signs are plentiful.

Gordon England, the acting deputy secretary of defense, has ordered the military leadership to find $32.1 billion in budget savings over the next five years, and Gen. T. Michael Moseley, the Air Force chief of staff, has warned that programs with significant cost growth risk being canceled. The Pentagon also is awaiting completion of a department-wide reassessment of missions, weapons and force that could recommend further changes.

Read more