General Dynamics Needs Deal to Combat Earnings Slump: Real M&A

General Dynamics Corp., which posted the smallest sales increase since 1995 last year, may now need acquisitions more than ever as it faces the weakest stretch of profit growth in two decades.

The maker of Gulfstream jets and Abrams battle tanks hasn’t done a billion-dollar deal for a publicly traded company in five years, and is “looking at opportunities” to buy businesses after revenue rose less than 2 percent in 2010, Chief Executive Officer Jay Johnson said last week. Buying flight-simulator maker CAE Inc. may boost growth, according to Fifth Third Asset Management, which sold General Dynamics on concern earnings will slump. Shareholder Fiduciary Trust Co. said General Dynamics should buy a company outside defense and aerospace or split up.