Dec. 20 -- Shares of Force Protection Inc. fell as much as 34% Wednesday after the US Defense Department's latest order for its heavily armored trucks came in much lower than expected, worrying investors that the Pentagon is increasingly turning to contractors that can build on well-established supply and maintenance programs.
The US military said late Tuesday that it would buy an additional 3,126 armored trucks for $2.66 billion, bringing its total order to 11,941 vehicles for delivery by mid-summer. The largest contract in the new order went to Navistar International Corp. subsidiary International Military and Government LLC for 1,500 vehicles -- bringing the company's total to 4,471 vehicles.
BAE Land Systems received an order for 600 vehicles, lifting its total order to more than 1,730, while Force Protection Inc. was asked for 358 armored trucks, or about 11% of the total order. The company is scheduled to deliver 3,584 vehicles in 2008, but has a limited number of orders after that.
Landon, S.C.-based Force Protection was one of the earliest adopters of a specially designed V-shaped hull that deflects the impact of explosions. Called mine-resistant ambush protected vehicles, or MRAPs, their popularity soared earlier this year as a way to reduce the number of troops being killed by roadside bombs in Iraq and Afghanistan.
In May, when the DoD first earmarked more than $1 billion to buy MRAPs, Force Protection looked well positioned to build thousands of the vehicles with the help of partners General Dynamics Corp. and BAE Systems. Its shares reached an all-time high of $31.16, but the company's stock stumbled as more rivals entered the market, and is now trading near where it was almost 18 months ago.