Recently, Lockheed Martin (NYSE:LMT) has come under scrutiny for the extreme costs to the U.S. government for its recent F-35 Lightning II Joint Strike Fighter. It is estimated that the price tag on one jet is 94.6 million dollars. President Trump recently said that the price is much too high. According to the Wall Street Journal, the cost cutting programs are intended to reduce the per unit cost to 80 million by 2020. Through joint programs between Lockheed, its partners and the U.S. government, the firm is working to lowering production costs. These cost reductions will probably come from greater efficiency, not from Lockheed sacrificing margins.
That said, in nearly all other cases, investors would run for the hills if they owned a firm that derives 23% of all revenue from a product deemed too expensive by its single largest buyer. Why is Lockheed Martin different?