Rockwell cancels, but not with contractor
Talk about out of the loop.
Rockwell International Corp. halted investments in the In-Flight Networks joint venture, but no one gave contractor Datron Systems Inc. a heads up. The developer and builder of antenna systems for the project heard the news when it was released yesterday.
And as of this morning, Vista, Calif.-based Datron had not heard anything about shutting down production on the nine systems, which bring transmissions from a stationary satellite into moving aircraft. The contract is well past half done, said Datron Chair, President and CEO David Derby.
"We're not the most urgent problem they have," he said, adding that his company isn't so arrogant as to believe it's instrumental in the decision.
Still, despite regular talks, Datron found out the day the news broke, he said.
Datron had a patented antenna system dating back to similar work it did for Delta Airlines. Delta decided not to use it at the time because of prohibitive costs. Rockwell's system built on that technology and is specific to Rockwell.
Rockwell spinoff Rockwell Collins, in a joint venture with Rupert Murdoch's News Corp., had already invested about $35 million in the technology to bring TV, movies, Internet and e-mail access to airline passengers. But there were no takers among the airlines.
The Milwaukee-based Rockwell yesterday said it would "cease further investments in the In-Flight Network joint venture due to slower-than-anticipated market development," and it would take a nonrecurring, after-tax charge of about $16 million in FY2001's second quarter for inventory writeoffs.
Details of the more than $3 million contract with Datron may not be worked out for several weeks, Derby noted, although the contract ensures Datron will be paid for the work. Stopping won't affect operating results, and long-term, will look like a market shakeout, he said.
Rockwell will decide the fate of its antenna systems. Until Datron hears otherwise, it's business as usual, Derby said.