Ceradyne (CRDN) Gets Expected Follow-on Order

Ceradyne (CRDN) opened sharply higher this morning when they announced some good news. Ceradyne Gets $133 Million Army Contract – 12/22/2006 4:31:00 AM – Manufacturing.Net – CA6402229

Ceradyne said Firday it received a $133 million delivery order for Enhanced Side Ballistic Inserts (ESBI) from the U.S. Army, Aberdeen Proving Ground, Maryland.

The thing is, the order was part of an already announced contract. For sales to the military companies generally get an umbrella contract for a large quantity over multiple years. However, each year’s portion is subject to Congressional approval. So while it would have been bad news if the company did not receive the follow-on, receiving it was more or less expected.

As trading continues, it appears the market is coming to this conclusion, as half the initial gains have been reversed.

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One Comment on “Ceradyne (CRDN) Gets Expected Follow-on Order”

  1. [...] It also serves as a good illustration of  PR word-mincing, as this $113 million “largest single ESAPI order ever received by Ceradyne” should not be confused with the $133 million ESBI order they received in December. For the record that, too, was a follow-on order as part of a previously announced contract. The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: Union Pacific (UNP) put options; Air Products (APD) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA - Annual Report; Ion Media Networks (ION); Three Five Systems (TFS); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Starbucks (SBUX) call options; Landstar (LSTR - Annual Report) put options; Plantronics (PLT) put options; [...]

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