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The consulting firm's longtime chief executive plans to use his company's experience in U.S. government contracting to expand into new commercial and geographic markets.
The $5.9 billion-in-revenue technology and management consulting firm Booz Allen Hamilton is celebrating a century in business this year. But the company's modern history began in 2008, when it split its U.S. government and global commercial operations into two separate organizations, which agreed not to compete with each other for three years. Private equity giant Carlyle Group bought a majority stake in the government contracting business, which retained the Booz Allen Hamilton name. The international commercial business became independent under the name Booz & Co. In November 2010, Booz Allen Hamilton went public at $17 a share. The shares are now trading at about $14.
CEO Ralph Shrader -- who, like many of his 25,000 employees, has a Ph.D. in electrical engineering -- has been with Booz Allen through it all. The 68-year-old joined the company in 1974 and has headed it since 1999, when it was still a private partnership. He previously led the company's technology division, which focuses on telecommunications and information technology as well as command, control, communications, computing and intelligence. In the three months ended September 30, 2012, net income adjusted for one-time items grew 10 percent from a year earlier, to $55.7 million, thanks to cost cuts that offset a 2.9 percent decline in revenue, to $1.39 billion. To sustain growth despite concerns about budget cutbacks (Booz Allen gets 98 percent of its revenue from the federal government), Shrader is looking to expand into nongovernmental work and into the Middle East, which could put his group in competition with Booz & Co. The company opened an office in Abu Dhabi in October and also has staff operating in Kuwait, Qatar and Saudi Arabia. Senior Writer Julie Segal recently talked to Shrader about Booz Allen's strategy and the challenges posed by the current political impasse in Washington.
Institutional Investor: Is your company's future clouded by the stasis in Washington?
Shrader: A continuing series of confrontations between the various parts of the government over our spending and revenue priorities would introduce a fair amount of instability and uncertainty into the whole government process. Given our reliance on the...