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lightsaber
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Boeing wants to buy woodward

Fri Feb 09, 2018 5:47 pm

https://www.wsj.com/articles/boeing-in- ... 1518104707
[I]
Boeing is flush with over $10 Billion of cash and has increasingly active in the deal arena[\i]

My take, suppliers need constant development of new aircraft to stay in business. While Boeing and Airbus are big customers, so are Bombardier, Textron, Northrop and Lockheed (Last two more for cost+ R&D). I'm not sure, even assuming Boeing buys Embraer, if cutting out Dassault, Gulfstream, and others is worth it. Meggitt, Moog, Curtiss, and Northrop would benefit selling easier to others. (Yes, Northrop. They supply a lot of everything from landing gear to being the #1 classified parts/sub-system vendor. But a culture of discretion, not PR.)

I do think there is one too many general aircraft component vendors. Who?

For example, IIRC Woodward is prime on the A350 cabin air, anti-ice, all valves, motors, and actuators. One vendor instead of a vendor per component. IIRC, they also won prime on the Trent XWB for externals (anti-ice, turbine clearance, engine start subsytem, regulators , surge vent valves, other relief valves, oil cooling subsytem, fuel subsytem (to RR flight fuel control), and maybe even fuel injectors (I don't know).

Lightsaber
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.
 
Varsity1
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 5:55 pm

News - Boeing is flush with cash.

A.net "popular opinion" Boeing is nearly Broke!!
"PPRuNe will no longer allow discussions regarding Etihad Airlines, its employees, executives, agents, or other representatives. Such threads will be deleted." - ME3 thug airlines suing anyone who brings negative information public..
 
Route66
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 6:28 pm

Varsity1 wrote:
News - Boeing is flush with cash.

A.net "popular opinion" Boeing is nearly Broke!!


And will never "pay off" the 787 development costs.
 
BREECH
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 6:29 pm

lightsaber wrote:
even assuming Boeing buys Embraer

You should REALLY stop reading yellow press! Actually, I apologize. Calling Wall Street Journal yellow press is an insult to the latter.
No friendship, love or respect unite people as much as shared hatred.
Sergey Dovlatov
 
BREECH
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 6:34 pm

Varsity1 wrote:
News - Boeing is flush with cash.

A.net "popular opinion" Boeing is nearly Broke!!

American financial laws allow this kind of accounting acrobatics. Boeing is actually IN DEBT for 32 billion. But that debt is "deferred". So instead of having to pay that debt, Boeing is allowed to be "flush with cash". It will all work brilliantly as it has been since President Roosevelt declared the "permanent war economy". Up until the moment when the world prefers the rinminbi to US dollar. And that moment is nearer than a lot of "popular opinion" think.
No friendship, love or respect unite people as much as shared hatred.
Sergey Dovlatov
 
Newbiepilot
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 6:45 pm

BREECH wrote:
Varsity1 wrote:
News - Boeing is flush with cash.

A.net "popular opinion" Boeing is nearly Broke!!

American financial laws allow this kind of accounting acrobatics. Boeing is actually IN DEBT for 32 billion. But that debt is "deferred". So instead of having to pay that debt, Boeing is allowed to be "flush with cash". It will all work brilliantly as it has been since President Roosevelt declared the "permanent war economy". Up until the moment when the world prefers the rinminbi to US dollar. And that moment is nearer than a lot of "popular opinion" think.


Dude, deferred production cost is not debt. Before derailing a legitimate conversation about Boeing potential acquisitions please educate yourself

A deferred cost is a cost that you have already incurred, but which you will not charge to expense until a later reporting period. In the meantime, it appears on the balance sheet as an asset. The reason for deferring recognition of the cost as an expense is that you have not yet consumed the item. You may also defer recognition of a cost if you wish to recognize it at the same time as related revenue is recognized, under the matching principle.

https://www.accountingtools.com/article ... -cost.html

Boeing has significant cash that it could use to acquire other companies. They have been doing so recently with other companies. Woodward may be a good target for them. I dont know
 
7673mech
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 6:54 pm

BREECH wrote:
Varsity1 wrote:
News - Boeing is flush with cash.

A.net "popular opinion" Boeing is nearly Broke!!

American financial laws allow this kind of accounting acrobatics. Boeing is actually IN DEBT for 32 billion. But that debt is "deferred". So instead of having to pay that debt, Boeing is allowed to be "flush with cash". It will all work brilliantly as it has been since President Roosevelt declared the "permanent war economy". Up until the moment when the world prefers the rinminbi to US dollar. And that moment is nearer than a lot of "popular opinion" think.


Source?
At least WSJ gives sources and is actually a pretty factual reporting rag.

You just throw out opinions like they are true - probably having read them elsewhere - Facebook and the like.
 
Varsity1
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 7:22 pm

BREECH wrote:
Varsity1 wrote:
News - Boeing is flush with cash.

A.net "popular opinion" Boeing is nearly Broke!!

American financial laws allow this kind of accounting acrobatics. Boeing is actually IN DEBT for 32 billion. But that debt is "deferred". So instead of having to pay that debt, Boeing is allowed to be "flush with cash". It will all work brilliantly as it has been since President Roosevelt declared the "permanent war economy". Up until the moment when the world prefers the rinminbi to US dollar. And that moment is nearer than a lot of "popular opinion" think.


You just solidified my post in concrete. Thanks!
"PPRuNe will no longer allow discussions regarding Etihad Airlines, its employees, executives, agents, or other representatives. Such threads will be deleted." - ME3 thug airlines suing anyone who brings negative information public..
 
bigjku
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 7:25 pm

lightsaber wrote:
https://www.wsj.com/articles/boeing-in-talks-to-buy-aerospace-parts-maker-woodward-1518104707
[I]
Boeing is flush with over $10 Billion of cash and has increasingly active in the deal arena[\i]

My take, suppliers need constant development of new aircraft to stay in business. While Boeing and Airbus are big customers, so are Bombardier, Textron, Northrop and Lockheed (Last two more for cost+ R&D). I'm not sure, even assuming Boeing buys Embraer, if cutting out Dassault, Gulfstream, and others is worth it. Meggitt, Moog, Curtiss, and Northrop would benefit selling easier to others. (Yes, Northrop. They supply a lot of everything from landing gear to being the #1 classified parts/sub-system vendor. But a culture of discretion, not PR.)

I do think there is one too many general aircraft component vendors. Who?

For example, IIRC Woodward is prime on the A350 cabin air, anti-ice, all valves, motors, and actuators. One vendor instead of a vendor per component. IIRC, they also won prime on the Trent XWB for externals (anti-ice, turbine clearance, engine start subsytem, regulators , surge vent valves, other relief valves, oil cooling subsytem, fuel subsytem (to RR flight fuel control), and maybe even fuel injectors (I don't know).

Lightsaber


Getting back on topic I think there is a lot interesting with this. The obvious angles are building up the service division and controlling cost in production. We all can see the plus and minus of doing that.

I am curious if there may be a bit of an IP angle to some of the vertical integration Boeing is pursuing as it pushes towards a new airplane. If you push certain systems and designs in a new direction you may want to retain full control of that stuff.

It’s not a great analogy but one could look at it a bit like the difference between the Apple approach and the Microsoft approach. As a theoretical construct what would a much more vertically integrated OEM have as advantages and disadvantages?

The big downside to me is potential higher cost if your volumes are lower. On the upside you can be an exclusive beneficiary of any improvements you are able to drive in those areas.

Taken to an extreme I have even thought of Boeing buying an engine builder. I mean the risk would be huge. But if you had the right plan and built the right engine and the other side couldn’t get it...at the very least it’s an interesting intellectual exercise.
 
Bricktop
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 8:13 pm

BREECH wrote:
Varsity1 wrote:
News - Boeing is flush with cash.

A.net "popular opinion" Boeing is nearly Broke!!

American financial laws allow this kind of accounting acrobatics. Boeing is actually IN DEBT for 32 billion. But that debt is "deferred". So instead of having to pay that debt, Boeing is allowed to be "flush with cash". It will all work brilliantly as it has been since President Roosevelt declared the "permanent war economy". Up until the moment when the world prefers the rinminbi to US dollar. And that moment is nearer than a lot of "popular opinion" think.

How is the debt deferred? Here's the thing: It is not debt in the first place. It is a deferred cost. A cost for which the have already disbursed the cash. On the other side of a balance sheet from "Assets" is the "Equities", which are claims on those assets. The two parts of the other side are Liabilities and Stockholders Equity. Boeing could (if they wished) move the deferred cost from Liabilities to S/E, but there are consequences to that. But remember, it will not affect the Assets section at all. The cash has already been spent. They believe that deferral was appropriate to match the costs incurred in the past with the revenue to be generated in the future. Incidentally, everyone who ever cracked open a Boeing Annual Report or 10-K can read this for themselves. It's not a secret, dirty or otherwise. I know the financially illiterate and the conspiracy theorists on a.net and elsewhere love to post endlessly on this subject, but there's no there there.
 
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lightsaber
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 8:20 pm

WSJ a poor source?!? If the WSJ says Boeing is looking at Woodward, I believe them.

Everyone is welcome to an opinion, just when billions of dollars are involved, let us cite sources.

bigjku wrote:
lightsaber wrote:
https://www.wsj.com/articles/boeing-in-talks-to-buy-aerospace-parts-maker-woodward-1518104707
[I]
Boeing is flush with over $10 Billion of cash and has increasingly active in the deal arena[\i]

My take, suppliers need constant development of new aircraft to stay in business. While Boeing and Airbus are big customers, so are Bombardier, Textron, Northrop and Lockheed (Last two more for cost+ R&D). I'm not sure, even assuming Boeing buys Embraer, if cutting out Dassault, Gulfstream, and others is worth it. Meggitt, Moog, Curtiss, and Northrop would benefit selling easier to others. (Yes, Northrop. They supply a lot of everything from landing gear to being the #1 classified parts/sub-system vendor. But a culture of discretion, not PR.)

I do think there is one too many general aircraft component vendors. Who?

For example, IIRC Woodward is prime on the A350 cabin air, anti-ice, all valves, motors, and actuators. One vendor instead of a vendor per component. IIRC, they also won prime on the Trent XWB for externals (anti-ice, turbine clearance, engine start subsytem, regulators , surge vent valves, other relief valves, oil cooling subsytem, fuel subsytem (to RR flight fuel control), and maybe even fuel injectors (I don't know).

Lightsaber


Getting back on topic I think there is a lot interesting with this. The obvious angles are building up the service division and controlling cost in production. We all can see the plus and minus of doing that.

I am curious if there may be a bit of an IP angle to some of the vertical integration Boeing is pursuing as it pushes towards a new airplane. If you push certain systems and designs in a new direction you may want to retain full control of that stuff.

It’s not a great analogy but one could look at it a bit like the difference between the Apple approach and the Microsoft approach. As a theoretical construct what would a much more vertically integrated OEM have as advantages and disadvantages?

The big downside to me is potential higher cost if your volumes are lower. On the upside you can be an exclusive beneficiary of any improvements you are able to drive in those areas.

Taken to an extreme I have even thought of Boeing buying an engine builder. I mean the risk would be huge. But if you had the right plan and built the right engine and the other side couldn’t get it...at the very least it’s an interesting intellectual exercise.

The issue is, aerospace is so conservative in design, it isn't possible to get ahead too much.

As to an engine maker, Boeing was there! Both Pratt and Boeing used to be part of United Aircraft.

Who would Boeing buy? They do not trust Pratt's GTF. GE is too big. RR? No one else has the horsepower to design an engine for Boeing.

Vertical integration only makes sense with a ROI. Boeing spun off their landing gear group a long time ago. Being vertically integrated also only makes sense under continuous product development.

777X
MoM
Then???

I know GE taught Boeing about diagnosis software. So with the 787 increasing reliability every software upgrade, perhaps Boeing is looking for the next improvement? FWIW, I predict the 787 will be the most reliable aircraft in commercial service within 3 years. It took a long time for the software to mature, but once you write a subroutine, it is written and easy to port to the next aircraft.

Lightsaber
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.
 
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william
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 8:36 pm

Interesting that Boeing is looking at services as a way to grow revenues. In doing so, I bet it puts Boeing in competition with some of its vendors and even Airline maintenance departments going for third party work.
 
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admanager
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 8:48 pm

Did anyone else read Woodford, not woodward. Maybe it was the missing capital W on Woodward, in the title but I thought - nice, Boeing is buying Woodford Reserve - the whiskey distillery. It makes 6 hours in a 737 more bearable.
 
bigjku
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 8:55 pm

lightsaber wrote:
WSJ a poor source?!? If the WSJ says Boeing is looking at Woodward, I believe them.

Everyone is welcome to an opinion, just when billions of dollars are involved, let us cite sources.

bigjku wrote:
lightsaber wrote:
https://www.wsj.com/articles/boeing-in-talks-to-buy-aerospace-parts-maker-woodward-1518104707
[I]
Boeing is flush with over $10 Billion of cash and has increasingly active in the deal arena[\i]

My take, suppliers need constant development of new aircraft to stay in business. While Boeing and Airbus are big customers, so are Bombardier, Textron, Northrop and Lockheed (Last two more for cost+ R&D). I'm not sure, even assuming Boeing buys Embraer, if cutting out Dassault, Gulfstream, and others is worth it. Meggitt, Moog, Curtiss, and Northrop would benefit selling easier to others. (Yes, Northrop. They supply a lot of everything from landing gear to being the #1 classified parts/sub-system vendor. But a culture of discretion, not PR.)

I do think there is one too many general aircraft component vendors. Who?

For example, IIRC Woodward is prime on the A350 cabin air, anti-ice, all valves, motors, and actuators. One vendor instead of a vendor per component. IIRC, they also won prime on the Trent XWB for externals (anti-ice, turbine clearance, engine start subsytem, regulators , surge vent valves, other relief valves, oil cooling subsytem, fuel subsytem (to RR flight fuel control), and maybe even fuel injectors (I don't know).

Lightsaber


Getting back on topic I think there is a lot interesting with this. The obvious angles are building up the service division and controlling cost in production. We all can see the plus and minus of doing that.

I am curious if there may be a bit of an IP angle to some of the vertical integration Boeing is pursuing as it pushes towards a new airplane. If you push certain systems and designs in a new direction you may want to retain full control of that stuff.

It’s not a great analogy but one could look at it a bit like the difference between the Apple approach and the Microsoft approach. As a theoretical construct what would a much more vertically integrated OEM have as advantages and disadvantages?

The big downside to me is potential higher cost if your volumes are lower. On the upside you can be an exclusive beneficiary of any improvements you are able to drive in those areas.

Taken to an extreme I have even thought of Boeing buying an engine builder. I mean the risk would be huge. But if you had the right plan and built the right engine and the other side couldn’t get it...at the very least it’s an interesting intellectual exercise.

The issue is, aerospace is so conservative in design, it isn't possible to get ahead too much.

As to an engine maker, Boeing was there! Both Pratt and Boeing used to be part of United Aircraft.

Who would Boeing buy? They do not trust Pratt's GTF. GE is too big. RR? No one else has the horsepower to design an engine for Boeing.

Vertical integration only makes sense with a ROI. Boeing spun off their landing gear group a long time ago. Being vertically integrated also only makes sense under continuous product development.

777X
MoM
Then???

I know GE taught Boeing about diagnosis software. So with the 787 increasing reliability every software upgrade, perhaps Boeing is looking for the next improvement? FWIW, I predict the 787 will be the most reliable aircraft in commercial service within 3 years. It took a long time for the software to mature, but once you write a subroutine, it is written and easy to port to the next aircraft.

Lightsaber


The engine thing was a thought exercise mostly. I agree with you vertical integration makes the most sense in two ways really. Either you are planning to innovate a lot and life is simplified by owning this stuff outright or you are planning to try and make a big leap and need to protect IP.

I don’t really know what to make of this move if it happens. To me it seems related to the things I hear about NMA. I don’t think it will be as conservative as many might think based on the Boeing people I have talked to. Their expectations for it are much higher than I would have thought and what has been described doesn’t really match what most here see as the target market.

To me if they are doing something very different there some of this makes sense. The more likely explanation is just cost control. Who knows if that works out though.
 
airzona11
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Re: Boeing wants to buy woodward

Fri Feb 09, 2018 11:22 pm

BREECH wrote:
Varsity1 wrote:
News - Boeing is flush with cash.

A.net "popular opinion" Boeing is nearly Broke!!

American financial laws allow this kind of accounting acrobatics. Boeing is actually IN DEBT for 32 billion. But that debt is "deferred". So instead of having to pay that debt, Boeing is allowed to be "flush with cash". It will all work brilliantly as it has been since President Roosevelt declared the "permanent war economy". Up until the moment when the world prefers the rinminbi to US dollar. And that moment is nearer than a lot of "popular opinion" think.


Yes, but as I am sure you are familiar, cash is king. You can throw shade all you want, Boeing is a very profitable / performing well business. With interest rates low, business growth across the market spectrum has been fueled by purchases.
 
WIederling
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Re: Boeing wants to buy woodward

Sat Feb 10, 2018 9:45 am

william wrote:
Interesting that Boeing is looking at services as a way to grow revenues. In doing so, I bet it puts Boeing in competition with some of its vendors and even Airline maintenance departments going for third party work.


LIke GE buying Avio this looks more like getting at a competitor's IP and suppliers.
Murphy is an optimist
 
ltbewr
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Re: Boeing wants to buy woodward

Sat Feb 10, 2018 10:11 am

Let us not forget that until the 1930's, Boeing owned Pratt & Whitney and United Airlines. USA Anti-trust laws forced a break up. Of course anti-trust law is just about non-existent in the USA for over 30 years allowing massive mergers.
Mergers and takeovers don't always work due to culture clashes and unforeseen financial issues. Then there are political implications especially with as to Boeing, non-USA companies. There are often losses of high paying jobs from mergers although in some cases, it may save jobs so a mix there. Boeing may want to have greater control by buying out competitors or sub-suppliers - recall the issues with the sub-contractor and what is the SC plant for the 787. The need to grow may be necessary as you may now see China based companies making more components for non-military aircraft and as have recently seen, whole planes.
 
WIederling
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Re: Boeing wants to buy woodward

Sat Feb 10, 2018 11:31 am

Varsity1 wrote:
News - Boeing is flush with cash.

A.net "popular opinion" Boeing is nearly Broke!!


You can have all the cash you like and still be effectively broke ( more dept than assets.)
Obvious that if you draw money from customers early and pay suppliers late
you will show much more liquidity.
lastly the mirage of the "deferred cost is asset" fairytail.
Murphy is an optimist
 
sxf24
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Re: Boeing wants to buy woodward

Sat Feb 10, 2018 12:13 pm

WIederling wrote:
Varsity1 wrote:
News - Boeing is flush with cash.

A.net "popular opinion" Boeing is nearly Broke!!


You can have all the cash you like and still be effectively broke ( more dept than assets.)
Obvious that if you draw money from customers early and pay suppliers late
you will show much more liquidity.
lastly the mirage of the "deferred cost is asset" fairytail.


Boeing has a lot of cash because it is generating cash flow. One reason is that it is decreasing deferred production costs. The payments that reduce that liability flow right into Boeing’s bank account.
 
BREECH
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 12:55 pm

Newbiepilot wrote:
Dude, deferred production cost is not debt. Before derailing a legitimate conversation about Boeing potential acquisitions please educate yourself

A deferred cost is a cost that you have already incurred, but which you will not charge to expense until a later reporting period. In the meantime, it appears on the balance sheet as an asset. The reason for deferring recognition of the cost as an expense is that you have not yet consumed the item. You may also defer recognition of a cost if you wish to recognize it at the same time as related revenue is recognized, under the matching principle.

If you don't understand what the paragraph above says, maybe YOU should educate yourself in the long forgotten art of reading, "dude".
No friendship, love or respect unite people as much as shared hatred.
Sergey Dovlatov
 
bigjku
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Joined: Sat Feb 17, 2007 10:51 pm

Re: Boeing wants to buy woodward

Sun Feb 11, 2018 1:01 pm

BREECH wrote:
Newbiepilot wrote:
Dude, deferred production cost is not debt. Before derailing a legitimate conversation about Boeing potential acquisitions please educate yourself

A deferred cost is a cost that you have already incurred, but which you will not charge to expense until a later reporting period. In the meantime, it appears on the balance sheet as an asset. The reason for deferring recognition of the cost as an expense is that you have not yet consumed the item. You may also defer recognition of a cost if you wish to recognize it at the same time as related revenue is recognized, under the matching principle.

If you don't understand what the paragraph above says, maybe YOU should educate yourself in the long forgotten art of reading, "dude".


Boeing doesn’t owe anyone that money. Charge it off today and it doesn’t cost them a dime. It will change their assets down by that amount and would show a large loss on the P&L. But it wouldn’t hanged their cash flow bottom line at all. It wouldn’t impact cash in the bank either.
 
BREECH
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 1:02 pm

airzona11 wrote:
Yes, but as I am sure you are familiar, cash is king. You can throw shade all you want, Boeing is a very profitable / performing well business.

Absolutely! It performs brilliantly. Just like the Ponzi scheme. Forget the debts, make cash NOW and think about the rest later. Trouble is, "the rest" tends to catch up to you and bite you in the exhaust in the end. The other examples of profitable / perofming well businesses are listed in the a little known document called Troubled Assets Relief Program. SO many well performing companies there.
No friendship, love or respect unite people as much as shared hatred.
Sergey Dovlatov
 
BREECH
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 1:04 pm

bigjku wrote:
Boeing doesn’t owe anyone that money. Charge it off today and it doesn’t cost them a dime. It will change their assets down by that amount and would show a large loss on the P&L. But it wouldn’t hanged their cash flow bottom line at all. It wouldn’t impact cash in the bank either.

They just found 25 billion to finance 787 program behind the book case? Well, maybe they did. But USUALLY things of that caliber are financed through bank loans, which you then have to pay off with interest.
No friendship, love or respect unite people as much as shared hatred.
Sergey Dovlatov
 
bigjku
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 1:16 pm

BREECH wrote:
bigjku wrote:
Boeing doesn’t owe anyone that money. Charge it off today and it doesn’t cost them a dime. It will change their assets down by that amount and would show a large loss on the P&L. But it wouldn’t hanged their cash flow bottom line at all. It wouldn’t impact cash in the bank either.

They just found 25 billion to finance 787 program behind the book case? Well, maybe they did. But USUALLY things of that caliber are financed through bank loans, which you then have to pay off with interest.


Without being mean you really don’t understand what happened here. Boeing paid for the program out of cash it was making on other aircraft. They ran a debit to the cash accounts to pay for it. That money was credited to the asset account of deferred expense rather than a straight expense.
 
BREECH
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 1:21 pm

bigjku wrote:
BREECH wrote:
bigjku wrote:
Boeing doesn’t owe anyone that money. Charge it off today and it doesn’t cost them a dime. It will change their assets down by that amount and would show a large loss on the P&L. But it wouldn’t hanged their cash flow bottom line at all. It wouldn’t impact cash in the bank either.

They just found 25 billion to finance 787 program behind the book case? Well, maybe they did. But USUALLY things of that caliber are financed through bank loans, which you then have to pay off with interest.


Without being mean you really don’t understand what happened here. Boeing paid for the program out of cash it was making on other aircraft. They ran a debit to the cash accounts to pay for it. That money was credited to the asset account of deferred expense rather than a straight expense.

You may be right actually. But I can't imagine a project like that financed from own cash.
No friendship, love or respect unite people as much as shared hatred.
Sergey Dovlatov
 
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SheikhDjibouti
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 1:24 pm

After visiting some dodgy sites on my computer late last night, I woke up today with a nasty virus. :hot:

I've never seen anything quite like it; it seems harmless enough because all it does is remove every occurrence of the letter "d".

So the headline I read was...

"Boeing buying Woowar"
I promised myself I'd leave before the party turned ugly. I would quit at 1000 !
Here I am stuck at 994; each time I'm tempted to post, I find myself wondering who will even read it / what is the point?
Or maybe I've just got nothing left to say.
 
bigjku
Posts: 1638
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 1:25 pm

BREECH wrote:
bigjku wrote:
BREECH wrote:
They just found 25 billion to finance 787 program behind the book case? Well, maybe they did. But USUALLY things of that caliber are financed through bank loans, which you then have to pay off with interest.


Without being mean you really don’t understand what happened here. Boeing paid for the program out of cash it was making on other aircraft. They ran a debit to the cash accounts to pay for it. That money was credited to the asset account of deferred expense rather than a straight expense.

You may be right actually. But I can't imagine a project like that financed from own cash.


Boeing makes a ton of cash. They won’t likely borrow anything to pay for 797 either. When Boeing borrows at the moment it does so mostly because it makes more sense to pay dividends or buy its own stock and the money they borrow is cheap.
 
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Channex757
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 1:32 pm

I can see this deal hitting the rocks thanks to US and EU antitrust legislation. It might just be more than the regulators are prepared to swallow at this stage, especially as international trade relations are febrile at the moment.
 
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par13del
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 2:10 pm

So if Boeing went to the banks tomorrow to borrow 20 billion to greatly reduce their deferred production liability on the 787 to make it more "acceptable" to A.Net investors, who would they be paying and what would the bank be looking at to protect their loan investment?
 
DfwRevolution
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 5:55 pm

lightsaber wrote:
For example, IIRC Woodward is prime on the A350 cabin air, anti-ice, all valves, motors, and actuators. One vendor instead of a vendor per component. IIRC, they also won prime on the Trent XWB for externals (anti-ice, turbine clearance, engine start subsytem, regulators , surge vent valves, other relief valves, oil cooling subsytem, fuel subsytem (to RR flight fuel control), and maybe even fuel injectors (I don't know).


Woodward also does big business outside of aerospace. They play in electrical distribution, oil & gas, industrial machinery, etc. I'm generally skeptical when a company with narrow industry focus acquires a company with broad industry focus. Management at firms like Boeing just don't know how to operate as a holding company. I think it's likely the industries outside the parent company's focus will wither away over time. There are ways to manage that like breaking-up the acquisition target and immediately selling the non-core industries. But done incorrectly, there's a good chance the acquirer pays a big premium for the target company and then a let's some fraction of that value go to waste.
I have a three post per topic limit. You're welcome to have the last word.
 
jeffrey0032j
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 6:00 pm

par13del wrote:
So if Boeing went to the banks tomorrow to borrow 20 billion to greatly reduce their deferred production liability on the 787 to make it more "acceptable" to A.Net investors, who would they be paying and what would the bank be looking at to protect their loan investment?

Its deferred cost, not liability. These are costs that have been incurred but not booked, says nothing about liabilities.

If translated into personal finance, I can incur a cost now, pay for it now, and book it over the next 24 months if I so wished to.
 
WIederling
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 6:20 pm

bigjku wrote:
Without being mean you really don’t understand what happened here. Boeing paid for the program out of cash it was making on other aircraft. They ran a debit to the cash accounts to pay for it. That money was credited to the asset account of deferred expense rather than a straight expense.


Non GAAP numbers ( per frame accounting ) shew some significant losses in the period. That disallows your theory "paid from cash influx".
You won't get away from "program accounting is legalized fraud".
Murphy is an optimist
 
bigjku
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Re: Boeing wants to buy woodward

Sun Feb 11, 2018 7:02 pm

WIederling wrote:
bigjku wrote:
Without being mean you really don’t understand what happened here. Boeing paid for the program out of cash it was making on other aircraft. They ran a debit to the cash accounts to pay for it. That money was credited to the asset account of deferred expense rather than a straight expense.


Non GAAP numbers ( per frame accounting ) shew some significant losses in the period. That disallows your theory "paid from cash influx".
You won't get away from "program accounting is legalized fraud".


You can pay from cash inflows and still have bottom line losses. In that period Boeing increased its borrowings from banks, utilized most of its positive cash flow and ran down its cash holdings. Since then it has ramped back up its cash holdings and reduced its debt load.

A good example is what they did from 2008-11. They increased borrowings $5 billion in 2010. They stopped share repurchases that has been $3 billion or so in 2008 and amassed the cash they would need to pay for the 787 expenses which ended up in the deferred column of about $7.3 billion in 2010. Overall they basically stopped or drastically slowed the return of cash to investors by share repurchase until 2013 which gave them billions of dollars each year to spend. They paid down a good chunk of the new debt in 2012-13. Once the growth in the deferred assets ends around 2015 the share purchases pick are accelerated again.

So yes, what was stated is true. Boeing paid for the 787 with its cash flows to this point. At times they borrowed a bit of money or changed what they spent their money on. But there is no giant $30 billion debt outstanding on the program and never was.
 
airzona11
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Re: Boeing wants to buy woodward

Mon Feb 12, 2018 3:29 am

BREECH wrote:
airzona11 wrote:
Yes, but as I am sure you are familiar, cash is king. You can throw shade all you want, Boeing is a very profitable / performing well business.

Absolutely! It performs brilliantly. Just like the Ponzi scheme. Forget the debts, make cash NOW and think about the rest later. Trouble is, "the rest" tends to catch up to you and bite you in the exhaust in the end. The other examples of profitable / perofming well businesses are listed in the a little known document called Troubled Assets Relief Program. SO many well performing companies there.


Again you are still missing the point. Earning revenue now vs earning cash now is not the same thing. Cannot be used interchangeably. What part of Boeing is a sham or ponzi? TARP? What are you rambling about?

Boeing is killing it. Airbus is killing it. Both are diversified businesses. Hence, Boeing looking to bu Woodward.
 
Route66
Posts: 203
Joined: Mon Dec 11, 2017 11:47 pm

Re: Boeing wants to buy woodward

Mon Feb 12, 2018 3:57 am

sxf24 wrote:
WIederling wrote:
Varsity1 wrote:
News - Boeing is flush with cash.

A.net "popular opinion" Boeing is nearly Broke!!


You can have all the cash you like and still be effectively broke ( more dept than assets.)
Obvious that if you draw money from customers early and pay suppliers late
you will show much more liquidity.
lastly the mirage of the "deferred cost is asset" fairytail.


Boeing has a lot of cash because it is generating cash flow. One reason is that it is decreasing deferred production costs. The payments that reduce that liability flow right into Boeing’s bank account.


Oh jeez. To WHOM do they owe money? WHAT payments? Please.

BREECH wrote:
bigjku wrote:
They just found 25 billion to finance 787 program behind the book case? Well, maybe they did. But USUALLY things of that caliber are financed through bank loans, which you then have to pay off with interest.


You make some highly opinionated comments for knowing so little about it. They used their own cash flow - they've been making money for a long time.
 
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lightsaber
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Re: Boeing wants to buy woodward

Mon Feb 12, 2018 4:37 am

DfwRevolution wrote:
lightsaber wrote:
For example, IIRC Woodward is prime on the A350 cabin air, anti-ice, all valves, motors, and actuators. One vendor instead of a vendor per component. IIRC, they also won prime on the Trent XWB for externals (anti-ice, turbine clearance, engine start subsytem, regulators , surge vent valves, other relief valves, oil cooling subsytem, fuel subsytem (to RR flight fuel control), and maybe even fuel injectors (I don't know).


Woodward also does big business outside of aerospace. They play in electrical distribution, oil & gas, industrial machinery, etc. I'm generally skeptical when a company with narrow industry focus acquires a company with broad industry focus. Management at firms like Boeing just don't know how to operate as a holding company. I think it's likely the industries outside the parent company's focus will wither away over time. There are ways to manage that like breaking-up the acquisition target and immediately selling the non-core industries. But done incorrectly, there's a good chance the acquirer pays a big premium for the target company and then a let's some fraction of that value go to waste.

Woodward is a controls company, so yes, there will be a huge amount of business that isn't focused.

I admit I was too aerospace focused. I lack imagination to know what Boeing will do with electric propeller controls.
I think this is Boeing's attempt to get suppliers to agree to tougher contract terms.
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.
 
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lightsaber
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Re: Boeing wants to buy woodward

Mon Feb 12, 2018 5:05 am

Ok, is Boeings total debt (Cash minus debt) really so low?
https://seekingalpha.com/article/413222 ... areholders
https://finance.yahoo.com/quote/BA/key-statistics?p=BA

$9.99 billion in cash, $11.12 in debt.

That is the net. The fact Boeing does a bunch of internal book-keeping (program accounting) is noise. A company with a gross profit of $13 billion isn't worried about $11 billion in debt.

So with that much revenue, Boeing needs to buy something. The question is, is Woodward a smart move for them? With wall street arguing their top line growth is too low... Probably.

I don't know how the topic went to Boeing debt, but it is absolutely trivial. So what if the 787 program owes every other program money? Net at Boeing is less debt than such a huge company should have. Time to borrow and grow.

So can we discuss if the Woodward deal is going forward or not? I know its been a weekend and I've Googled... I'm curious Boeing's end game.
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.
 
BREECH
Posts: 447
Joined: Tue Jun 30, 2009 3:20 am

Re: Boeing wants to buy woodward

Mon Feb 12, 2018 6:20 am

Route66 wrote:
You make some highly opinionated comments for knowing so little about it. They used their own cash flow - they've been making money for a long time.

It's "while knowing...", and thank you, I take it as a compliment. And if you don't mind, could you tell me in which department of PriceWaterhouseCoopers do you work "for knowing" so much about Boeing's internal accounting and cash flows? And doesn't this constitute disclosure? :-D
No friendship, love or respect unite people as much as shared hatred.
Sergey Dovlatov

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