MOST NOTEWORTHY: AbitibiBowater, GlaxoSmithKline, AstraZeneca and Capital One were today's noteworthy downgrades:

• Lehman downgraded AbitibiBowater (NYSE: ABH) to Equal Weight from Overweight citing dilution from the recent $350M convertible offering, cost pressures, and a more cautious outlook near-term for pulp markets.
  
• JP Morgan cut GlaxoSmithKline (NYSE: GSK) and AstraZeneca (NYSE: AZN) to Underweight from Neutral on long-term earnings growth concerns.
  
• Keefe Bruyette lowered Capital One (NYSE: COF) to Underperform from Market Perform to reflect the company's credit outlook.

OTHER DOWNGRADES:

• Nokia (NYSE: NOK) was downgraded to Neutral from Buy at UBS and to Underweight from Overweight at JP Morgan.
  
• Textron (NYSE: TXT) was cut at Credit Suisse to Neutral from Outperform.
  
• Merriman downgraded Blue Coat Systems (NASDAQ: BCSI) to Neutral from Buy.

Bell Boeing has received a $10.4 billion U.S. Department of Defense contract for the V-22 Osprey that guarantees production of at least 167 more of the aircraft through 2012, Bell Boeing announced Monday.

Bell Boeing is a strategic alliance between Bell Helicopter, a unit of Textron (NYSE: TXT) company, and Boeing (NYSE: BA).

The five-year contract includes 26 CV-22 aircraft for the U.S. Air Force Special Operations Command and 141 MV-22 aircraft for the U.S. Marine Corps. The contract includes an option for additional aircraft.

Both Boeing and Textron moved higher on the news. Boeing shares gained 83 cents to $74.30 and Textron rose 47 cents to $55.07 in early Monday trading.

The V-22 is a tiltrotor aircraft with proprotors and engines installed in nacelles at the tips of both wings.

Analysis: The contract is good news on a number of fronts, the most obvious of which is additional work for Boeing and Textron. In the last six months Boeing shares have declined roughly $30 to about $74 on rollout delays for its next-generation 787 Dreamliner commercial aircraft, and the U.S. economic slowdown. The news is also a mild shot in the arm for the U.S. economy, which given the large number of industrial jobs lost to cheaper overseas manufacturing zones, can use all of the domestic industrial jobs it can get.

Look for Textron (NYSE: TXT) to continue to benefit from the global economy's tailwind.

Strong global economic growth should continue to generate solid demand of the company's Cessna jets and planes, which accounted for 51% of its profits. Further, analysts expect Textron's Bell division to perform well in 2008-2009 on strong commercial and military helicopter orders.

Textron's Industrial division should also post solid results, manufacturing everything from golf carts to lawn care machinery to auto parts. A decent, stable dividend adds to the mix. The Reuters F2007/F2008 EPS consensus estimates for TXT are $3.49/$4.09.

According to the Sunday New York Times, conglomerates are back. Companies like ITT Corp. (NYSE: ITT) and Textron Inc. (NYSE: TXT) are trading near multi-year highs. William Holstein writes:

To some extent, the new conglomerates have simply become lucky. They are riding a global infrastructure spending boom for airports and airlines, power systems, waste water and environmental projects, and hospitals and health care systems, not to mention record government spending on military projects and security surveillance. Their ability to assemble product offerings from different industries is a source of strength, they say.

While I'd be extremely skeptical if someone referred to the recent strength of conglomerates as some sort of new paradigm, it really may be different this time. The conglomerate boom of the 1960s and 1970s ended in disaster for many of the high-fliers, but changes have been made. Private equity firms have employed a conglomerate-like model to generate huge returns for their investors, and smarter management and more competent deal-making is leading to better-crafted hodgepodges of divergent businesses.

Honeywell International (NYSE: HON) CEO David Cote is also quoted in the Times piece: "When you look back at the history, the companies were put together without any real integration. They were really just holding companies. They didn't try to do anything to make the businesses better."

The old-time model of hyping the stock of a conglomerate and using it to acquire companies at a lower price/earnings multiple is no longer in vogue, mercifully.

For an interesting, although not entirely enjoyable, look at the history of the conglomerate business model, pick up a copy of The Rise and Fall of the Conglomerate Kings by Robert Sobel.

Transporting the executive stylishly is a demanding business, but there is an outfit in Providence, Rhode Island that has several of the avenues covered. Their planes, helicopters and golf carts are well thought of by the business crowd. In fact, their products are popular with the military set, too.

Textron, Inc. (NYSE: TXT) specializes in general aviation aircraft. The firm's Bell segment makes helicopters and tiltrotor aircraft for both military and commercial applications. This segment also manufactures weapons, surveillance systems, aircraft landing systems, hovercraft, rescue vessels, armored vehicles and turrets. The Cessna unit manufactures business jets, single engine turboprop caravans, and single engine piston aircraft. The Industrial division offers golf carts, off-road utility vehicles, lawn care machinery and power tools. The Finance segment handles commercial loans. Major competitors include General Electric (NYSE: GE) and United Technologies (NYSE: UTX).

The company pleased investors last week, when it reported Q2 EPS of $1.69 and revenues of $3.23 billion. Analysts had been expecting $1.45 and $3.09 billion. Management also guided Q3 EPS to $1.45-$1.55 ($1.53 consensus), FY07 EPS to $6.35-$6.55 ($6.31 consensus) and FY07 revenues to about $12.87 billion ($12.6B consensus). Further, the company announced a 2-for-1 stock split (8/24/07), a 19% increase in its annualized dividend rate and a 24 million share repurchase program.