New Northrop CEO Is Upbeat, Cost-Conscious
On his first day as Northrop Corp.’s chief executive, Kent Kresa told reporters Tuesday that he is upbeat about the aerospace firm’s future and believes that the company should remain independent amid the approaching defense industry shakeout.
“As a more rational and peaceful world comes upon us, there will still be a need for defense,” Kresa said at a wide-ranging press conference. “I am bullish about our future, though it is not without challenges.”
Kresa added the title of chief executive to his job as company president Tuesday after Northrop Chairman Thomas V. Jones left active management of the company. Jones remains chairman of the board but retired as CEO and as an employee of the company. He will give up his office at the top of Northrop’s posh Century City tower.
Northrop will continue to focus on its leadership in aerospace technology, Kresa said. But at the same time, the company is likely to change its sometimes-upscale corporate culture. Kresa confirmed that the company is selling its $20-million Gulfstream business jet, because “I saw no need for it and thought it was an expense we could do without.”
Kresa said the company’s sales will be flat this coming year and employment will be flat to slightly down. Northrop now has 42,000 employees. The company hopes to sharply reduce its debt in the 1990s and eliminate short-term bank debt by the mid-1990s, Kresa said.
At the same time, investors have sharply bid down the company’s shares. Northrop shares closed Tuesday at $18 on the New York Stock Exchange, down from a 1989 high of $29.75. Northrop’s market value has fallen to about $846 million, even though it has a potential business backlog of more than $100 billion. The low stock price could make the company vulnerable in the coming industry consolidation.
“There is always a vulnerability when your stock is selling as low as it is,” Kresa said.
But he added, “We see that our biggest strength will be as an independent organization tracking our own destiny.”
