The reaction at Force Protection Inc. (Updated)

Force Protection Inc. took quite a hit with its tiny slice of the latest Pentagon MRAP order. Shares fell dramatically in response. The company's bread and butter, the MRAP, seems to be losing a customer at the Pentagon and the Cheetah vehicle, marketed as a replacement for the Humvee, seems to have been proposed at an awkward moment. Instead of jumping on the soon-available product, the Pentagon opted to bide its time and gain more field experience with MRAPs while accelerating the JLTV program.

That seems to leave the Cheetah in U.S. Military limbo unless it can be turned into a serious JLTV competitor. But the competition for that contract will pit Force Protection against very accomplished military hardware companies that have recently demonstrated their ability to compete by squeezing FPI almost completely out of the MRAP market that it once dominated.

So what does Force Protection plan to do about it?

Force Protection executives did not respond to requests for comment Monday. In an interview over the weekend with Bloomberg news service, Michael Aldrich, the company's vice president for government relations, said it was "very likely" that Force Protection "will spend more resources now courting other customers" besides the U.S. military.

"If we are getting more MRAP orders, it's a great secret to us," Aldrich said. "It's particularly bad timing because it's at a time we were peaking in our ramp-up (of production). We will right-size the company."

(The Post and Courier)

Courting other customers makes sense. The British appear to favor the Cougar (they call it the Mastiff after performing their own armor upgrades). The Italians have placed an order. Perhaps the French might be interested in a few if Sarkozy commits French troops to war zones in Afghanistan.

On the face of it, foreign orders will not nearly make up for the loss of business from the Pentagon. Not only are countries not already involved in a conflict not likely to need an MRAP immediately, a heavy expectation exists that the U.S. will mothball its MRAPs after the Iraq War draws down. That creates a secondhand MRAP market that may close off FPI's efforts to sell new vehicles, though at the same time it offers hope of vehicle maintenance contracts (replacement parts and the like).

It's hard not to root for Force Protection because of its feisty entry into the MRAP market even if some of the Internet cheerleading has gone beyond ridiculous. The company certainly has its work cut out for it as it tries to plot a course into the future.

It could be worse. They could be Protected Vehicles, Inc.


Update:

Force Protection is acting wisely by trying to settle the uncertainty abouts its financial picture before trying to court foreign markets.

LADSON, S.C. - (Business Wire) Force Protection, Inc. (NASDAQ:FRPT) today announced that it will host a conference call and webcast at 4:30 p.m. Eastern Time on Monday, March 24, 2008 to discuss recent company events.

While the question-and-answer session of the call will be limited to institutional analysts and investors, retail brokers and individual investors are invited to listen to a live webcast. The webcast can be accessed via the link from the home page of the Company’s website at www.forceprotection.net. Please visit the website at least 15 minutes prior to the call to register for the webcast and download any necessary software.

(The Earth Times, via BusinessWire)

*****