Brooks Automation (NDAQ: BRKS) shares jumped higher after a large holder demanded that the company commit to an immediate and continuing substantial share repurchase program. The request was initially made by activist investor David Nierenberg on October 6th in a letter addressed to chief executive Robert Lepofsky. The letter called on the company to utilize free cash over the next three or four years to fund an aggressive share buyback program.

Nierenberg believes that Brooks has, and can generate, sufficient cash over the next three or four years to both fund an aggressive share repurchase program, which would nearly halve their share count relative to Brooks' 77 million shares before their first repurchase, and enable Brooks to roughly double its revenues relativel to their current revenue run rate, through organic growth and acquisitions. The activist urged them to act now while the share price is weak.

The program will enable Brooks to grow their earnings per share and increase return on invested capital by actively managing three variables: revenue growth, costs, and capital expenditures. Similar long-term programs have been used to successfully build shareholder value at Teledyne from 1972 to 1984, and for decades at Loews Corporation and Washington Post. At Teledyne the repurchase program enabled it to increase EPS nearly six times faster than net income.

Finally, Nierenberg provided an example: If Brooks were to repurchase 26 million shares at a hypothetical average price of $10 per share over the next several years, it would only require $260 million, which leaves $198.4 to $318.0 million for acquisitions in the future. The result would be a share price for Brooks of between $26.40 and $44.25 a piece at 15x earnings. Meanwhile, if money is tight, the company can monetize all of their real estate.

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INX Inc. (NDAQ: INXI) shares fell today after the company released news relating to its order book. The order book increased 47%  with September bookings increasing by 17% in total while the last two weeks saw bookings jump by 33% in total. However, this strong growth was met by concerns that orders may slow as the economy weakens.

INX noted, "While demand by customers has been healthy right up through the last two weeks of September, our sales staff are indicating that some customers are delaying moving forward with some large projects, and it is logical that the uncertainty of the last several weeks will cause some enterprise organizations to delay cap-ex expenditure projects."

INX is a provider of IP networked based solutions for enterprise-class organizations, such as corporations, schools and federal, state and local governmental agencies. The company's solutions consist of network infrastructure, IP voice and video communications systems, wireless network connectivity, network storage solutions, data center, and network and data security.

Shares of INX are down $0.29, or 4.61%, to $6.00 per share.

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The stock market may be struggling, but defense companies are still on their feet. Several contracts were announced today in this sector, indicating that defense spending is still going strong and some public companies are well-positioned to profit. TWo wars have done a lot to sustain spending, but some are concerned about at least one presidential candidate is interested in withdrawing troops and putting an end to the Iraqi conflict.

Lockheed Martin (LMT) announced a $41 million contract from the US Transportation Command to extend sustainment of Global Transportation Network command and control system. The sustainment contract brings the total value of the contract to $475 million. Kratos Defense & Security Solutions (KTOS) announced that its Madison Research Division had been awarded a $10.3 million contract from the U.S. Army on behalf of the Experimentation Division.

Recently, the Senate passed a military spending bill that includes a pay raise for military personnel. The bill will permit $612.5 billion in spending for military programs in 2009 with $70 billion for Iraq operations and Afghanistan. The pay increase for military personnel will be 3.9 percent. These new spending approvals will pave the way for future awards for these defense contractors and allow expansion in market share.

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