(Bloomberg News) Gun maker seeks U.S. Army contract

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http://www.iht.com/articles/2006/08/22/news/wesson.php

Gun maker seeks U.S. Army contract
Bloomberg News

Published: August 22, 2006



WASHINGTON Smith & Wesson, fresh from winning military contracts in Afghanistan, now wants a bigger prize back home: a U.S. Army deal worth as much as $500 million that would be its biggest defense order ever.

The largest U.S. handgun company, which makes the .44 Magnum popularized in Clint Eastwood's "Dirty Harry" movies, will bid on a contract to make about 645,000 of its .45-caliber pistols over the next 10 years, the chief executive, Michael Golden, said in an interview. Beretta of Italy has the current Army contract, which expires next year.

Golden has been pushing Smith & Wesson into the government market since he took the top job two years ago. He has hired a lobbyist and a manager in Washington and says he has made 24 trips to the capital himself in the past year to drum up business. The prospect of more government sales has helped Smith & Wesson shares more than triple in value in the last 18 months.

"The company kind of got stale years ago," said Eric Wold, an analyst at Merriman Curhan Ford in New York, who does not own the shares. Smith & Wesson had a recognized brand name "but hadn't done anything to expand beyond that."

Helped by four deals in Afghanistan since April 2005, including a $15 million sale of 50,500 pistols to the Afghan National Police, Smith & Wesson's revenue jumped 27 percent to $160 million in the fiscal year that ended in April, after growth had slowed to 5.2 percent in fiscal 2005.

Three-fourths of the company's sales are still to U.S. consumers; just 14 percent is to the federal government and law enforcement agencies, and 11 percent is overseas, mostly to police forces.

"We firmly believe that the U.S. military should use a high-quality, well-designed product, manufactured in the U.S. by a U.S. company," Golden said.

To change the sales mix, Golden last year hired the Washington lobbying firm Greenberg Traurig and Ernest Langdon, a military consultant who had worked at Beretta, to be Smith & Wesson's director of government sales.

"We're a gun company, the country is at war, and nobody was looking out for our legislative needs," Golden said. He declined to say whom he had met with during his Washington visits.

Smith & Wesson shares fell 36 cents to $8.58 Monday. They reached $9.12 on Aug. 4, the highest since Saf-T-Hammer, a maker of trigger locks and other gun safety devices, bought Smith & Wesson and took on its name in 2001.

Beretta may have given Golden a boost in his quest for military business. The 9-millimeter guns it provides under the Army contract have a reputation for jamming, said Cai Von Rumohr, a Cowen & Co. analyst in Boston.

"What was malfunctioning wasn't the pistol, but the magazine," which Beretta bought from another company, said Matteo Recanatini, a spokesman for the privately owned company.

The supplier redesigned the magazine and resolved the issue, he said. Beretta has sold the U.S. Army 500,000 guns over the past 25 years through this contract.

An

Army spokeswoman, Kathy Roa, confirmed that the problem has been resolved. She declined to respond to additional questions about the contract.

Golden, who was an executive at the tool companies Black & Decker and Stanley Works before joining Smith & Wesson, also has tried to revive the company's law-enforcement business.

Smith & Wesson's share of the police market, once as high as 98 percent, plummeted to 10 percent in the 1980s after an Austrian competitor, Glock, developed a polymer gun that was lighter and quicker to load, Wold, the analyst said. Glock now has 65 percent of the law-enforcement market.
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Hi
I Think Tahtn They Will Go With A Modified M&p, But I Heard Rumors That The Us Army Was Looking For A New Hk, Similar To The New Compact .45 But With A Lem Trigger. The Way The Submission Was Written, In No Way The 4 Star General Want The Good Ol'1911 To Be Back, They Won't Admit The Mistake They Had Done When They Switched To The 9mm.
 
Huh..Beretta 9mm jamming due to magazine FTFs? I don't know...but I guess I was n't really there.

It's crazy how Glock stole so much market from S&W...you snooze, you lose, I guess. I never found anything I really liked about S&W pistols. I mean, some of their automatics are nice and I would definately pick one up if it didn't carry such a heavy price tag.
 
sakabush said:
snip...
Smith & Wesson's share of the police market, once as high as 98 percent, plummeted to 10 percent in the 1980s after an Austrian competitor, Glock, developed a polymer gun that was lighter and quicker to load, Wold, the analyst said. Glock now has 65 percent of the law-enforcement market.
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Until the mid '60s Colt had approx 75% of the LEO market. They lost it to Smith with their various union conflicts & poor management practices.

Unfortunately, as Colt eliminated itself from the LEO market in the mid '70s, Smith tried to follow the same path. Unfortunately for them coinciding with the euro "wonder-nine" revolution of the mid '80s.
 
Looks like the folks who actualy have to use a handgun in harms way finally managed to get heard.;)

No slams against the 9mm fans, but we do have the ability to supply our military with ammunition without borrowing it from NATO

We went this way before with the .38 until the troops figured out it wasn't doing the job. Hopefuly the second time around the lesson will stick.
 
Lee Enfield said:
Until the mid '60s Colt had approx 75% of the LEO market. They lost it to Smith with their various union conflicts & poor management practices.

Unfortunately, as Colt eliminated itself from the LEO market in the mid '70s, Smith tried to follow the same path. Unfortunately for them coinciding with the euro "wonder-nine" revolution of the mid '80s.
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There is no way Colt had 75% of the LE market in the 1960's. Colt may have had that much in the early part of the 20th century, but by the 50's, S&W had the majority of the police market in North America. By the 1950's the Official Police and New Service were on the way out and the S&W M&P was taking over. In the 60's, Colt concentrated on the M16 contracts with the US government and let the handgun market slide, except for the 1911's.

The poor management and union problems surfaced in the 1970's at Colt which started a series of bankruptcies and Chapter 11's and bailouts from the State on Connecticut and others.

Another nail for Colt was that S&W was making a superior product at a cheaper price.
 
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They've obviously got a .45 version of the S&W M&P pistol in mind, but it looks as though the current contract proposal has been suspended with the exception of the SOCOM bit.

As for Beretta, the magazines were being made by a company called: Checkmate or something like that, and they were rubbish. There wasn't a problem with the pistol.
 
cybershooters said:
They've obviously got a .45 version of the S&W M&P pistol in mind, but it looks as though the current contract proposal has been suspended with the exception of the SOCOM bit.

As for Beretta, the magazines were being made by a company called: Checkmate or something like that, and they were rubbish. There wasn't a problem with the pistol.
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Checkmate also supplies magazines for Colt's 1911 pistols and I can attest to the fact that they are crap.
 
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