By Michael Brush, MarketWatch
President Donald Trump this week proposed a mere 0.3% increase in military spending to $740.5 billion next year.
But inside that budget, there’s a big emphasis once again on high-tech defense capabilities in areas like cyberwarfare, use of the cloud in the battlefield, specialized drones, advanced communications and artificial intelligence.
Here’s some of the military wizardry your tax dollars are paying for, and some of the gear suppliers that will benefit if Congress and Trump see eye to eye on high-tech battlefield gear spending.
Superfast data transfer to the battlefront
Booz Allen Hamilton /zigman2/quotes/203977398/composite BAH +0.18% got its first defense-sector gig in 1940 advising the Navy on how to gear up for World War II. Today it generates 69% of revenue from defense and intelligence customers, and 96% from government agencies overall.
It plays a big role in putting high tech in the hands of soldiers on the battlefield. One example: Booz Allen offers technology that converts giant video files to bandwidth-light metadata that warfighters can more easily download to mobile mapping software.
To protect this intelligence, Booz Allen has a partnership with Dell /zigman2/quotes/203822527/composite DELL +2.33% to supply ultra-secure tablets that can be remotely “bricked” on command if they get in the wrong hands, even when the power is off. It also helps the military with virtual reality software development.
“We have a high degree of confidence in Booz Allen Hamilton, given the company’s strategic role as a bridge between Silicon Valley and the U.S. Department of Defense,” says William Blair analyst Louie DiPalma.
Cubic offers highly sophisticated technology that helps warfighters download real-time satellite imagery practically anywhere. Called phased array technology, this uses collections of antennas to boost signal strength. It offers this technology through its GATR Technologies division. Cubic’s DTECH Labs division helps deploy servers, storage, and networking to battle zones. And its Pixia provides a software platform called HiPER LOOK, a video tool that helps users share and zoom in on images.
When defense agencies want drones, they turn to Kratos Defense & Security Solutions /zigman2/quotes/201233073/composite KTOS +1.67% . Early on, it developed drones that mimic fighter aircraft and missiles for use in training and testing. Kratos likes to keep the technology it develops, so it then leveraged this know-how to develop drones that can be used in warfare. The Air Force has hinted that a recent Kratos drone offering called the Valkyrie will see strong demand because it performs well and is relatively inexpensive, says DiPalma.
Kratos gets 73% of revenue from U.S. government, which is mainly defense and intelligence related. Most of the rest comes from foreign defense agencies.
AeroVironment /zigman2/quotes/201209017/composite AVAV +2.90% offers a kamikaze drone that soldiers can carry in backpacks. Called the Switchblade, this drone can be used for reconnaissance, or to crash into targets with a warhead. The Army may ink a new long-term contract for these soon. AeroVironment offers other drone systems popular with the military, such as the Puma and the Raven.
Iridium Communications /zigman2/quotes/208839949/composite IRDM -1.81% is rolling out transceivers (named 9770) that should generate good revenue growth because of their ability to support beyond line-of-site multimedia feeds from small drone cameras to mobile devices used by soldiers. Called Certus 9770, these should get sales traction soon.