Hughes Wins Contract for New Missile
Hughes Electronics Corp. on Friday won a $421.7-million contract to develop a new Pentagon missile, beating Raytheon Co.
Hughes, a Westchester-based unit of General Motors Corp., will spend the next five years refining its proposal for the AIM-9X short-range air-to-air missile and building as many 1,000 missiles, the Pentagon said in a statement. The work will be done in Tucson, Ariz.
The heat-seeking missile is to be used on virtually all U.S. combat airplanes. Navy and Air Force plans call for 10,000 of the missiles to be produced during the next 20 years. Development and production costs are put at about $5 billion.
“This win establishes us as the market leader of air-to-air missiles for the next two decades,” said Louise Francesconi, president of Hughes’ missile operation.
Raytheon executives were unavailable to comment. Hughes’ stock fell 62.5 cents to close at $55.125, while Raytheon’s stock rose 62.5 cents to $46.875. Both trade on the New York Stock Exchange.
Friday’s decision comes as the bidding for Hughes’ defense businesses, which include missiles, radar systems, and aircraft avionics systems, enters its final stages, people familiar with the situation said. Raytheon and St. Louis-based McDonnell Douglas Corp. are considered the leading candidates to buy the businesses, which generated about $5.9 billion in revenue last year and are expected to fetch about $8.2 billion.
In a separate development, General Dynamics Corp. and Litton Industries Inc. were awarded a total of $1.3 billion in contracts to make four destroyers for the Navy.
