|
Raytheon cuts 14,000 jobs
|
 |
October 7, 1998: 6:38 p.m. ET
Defense titan also will close, downsize facilities in cost-cutting drive
|
NEW YORK (CNNfn) - Defense giant Raytheon Co. said Wednesday it plans to slash 14,000 jobs, or 16 percent of its workforce, and close a host of facilities by the end of 1999 to reduce operating costs.
The Lexington, Mass.-based company, a sprawling conglomerate with market capitalization of $12.5 billion, also said it expected third-quarter earnings to fall short of analysts' expectations of 90 cents per share.
The company added, however, it expects to achieve fourth-quarter financial results in line with consensus estimates of $1.08 per share.
Raytheon will take a one-time after-tax charge of $284 million, or 83 cents per share, during the quarter to shrink facilities at Raytheon Engineers and Constructors and to exit a business at Raytheon Commercial Electronics, which includes a Korean joint venture.
Last layoffs were in January
Raytheon said it plans to reduce employment at its Raytheon Systems division by 12 percent this year and 4 percent in 1999.
In January, Raytheon Systems announced plans to cut 8,700 jobs over the two-year period, close 20 plants and scale back operations at six others.
To date, 4,000 of those layoffs have been made, Daniel Burnham, Raytheon's president and chief operating officer, said Wednesday during a conference call with reporters.
Following the latest actions, Burnham said, Raytheon's total facility space will be reduced by about 25 percent from a January level of about 42 million square feet.
"These cost reduction actions are difficult and painful, but are absolutely necessary to ensure a productive and viable future for this enterprise," said Burnham.
"We are committed to treating our employees with dignity and respect during this process. For those affected by employment reductions, we will provide a benefit package as well as career transition assistance, as we have done in the past."
Among the facilities to be closed by the end of 1999 are the Naval and Maritime Facility at Mukilteo, Wash.; the Orangeburg, S.C. plant; and a Lewisville, Texas, facility. The Waltham West, Mass., facility will be shut down and work will be transferred to Andover and Tewksbury, Mass.
Raytheon said its Strike Systems Business Unit will relocate to Tucson, Ariz., and Circuit Card Assembly will be consolidated with the CCA work in Andover, Mass.
Raytheon also said its RSC unit will reorganize certain business segments to "better align the operations with customer needs and to remove redundancy."
Integrating Hughes and TI
Raytheon operates in three business segments: commercial and defense electronics, engineering and construction, and aircraft.
Until Raytheon acquired the defense businesses of Texas Instruments and General Motors' Hughes Electronics last year, it was the third-ranked aerospace and defense company, just behind Boeing and Lockheed Martin.
With the buyouts, Raytheon doubled in size, pulling in an estimated $21 billion in annual revenue.
By accelerating and expanding its cost-reduction efforts at Raytheon Systems, its major defense electronics operation created last December in the wake of the TI and Hughes buyouts, Raytheon said it hopes to address changing customer needs.
The defense business, which represents 68 percent of total sales at Raytheon, is feeding into a market that has grown more rapidly than Raytheon executives anticipated, Burnham said Wednesday.
At the same time, declines in U.S. defense spending in the 1990s have forced defense contractors to become ever more wily in devising ways to keep growing while boosting share value.
Burnham insisted Wednesday that the integration of the TI and Hughes units into Raytheon had proven so successful that company felt emboldened to take some "tough medicine" in cutting costs further.
"This is a tough new story for many thousands of people and let's not sugarcoat it," Burnham said.
The third-quarter restructuring charge includes the following: a $50 million after-tax, or 15-cent per-share, charge for the downsizing of Raytheon Engineers and Constructors; a $180 million after-tax, or 52-cent per-share, downward revision in the estimated impact from a slump in RE&C's business and contract claims; and a special after-tax charge of $54 million, or 16 cents per share, to exit the Raytheon Commercial Electronics business.
Raytheon class-B shares ended up 1-3/4 at 58 Wednesday on the New York Stock Exchange on volume of 2.6 million shares.
|
|
|
|
|
|
Raytheon
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
