Lockheed to Leave Telecom Business
Defense contractor Lockheed Martin Corp. said Friday that it will quit the telecommunications business, selling stakes in three satellite networks and taking a $1.7-billion charge, because of overcapacity across the telecom sector.
Pieces of Lockheed Martin Global Telecommunications will be retained, but the rest will be sold, including large stakes in the Intelsat, Inmarsat and New Skies international mobile satellite networks, the company said.
The decision comes just a year after Lockheed spent $2 billion to buy the 51% of satellite operator Comsat Corp. that it did not already own.
But the restructuring was expected among Wall Street and industry analysts, who have long pointed to overcapacity in satellite telecommunications.
Shares of Lockheed fell 46 cents to $45.74 on the New York Stock Exchange.
Lockheed plans to keep three parts of the telecom operation: Systems & Technology and Comsat General, with strength in network engineering and advanced satellite technologies, and U.S. Enterprise Solutions, a provider of information technology services to commercial customers in the U.S.
Those units, which generate about $450 million in revenue annually, will be folded into other business segments.
The Bethesda, Md., maker of fighter jets and missile systems said it will record after-tax charges in the fourth quarter totaling $1.7billion, or $3.96 a share, for the restructuring.
Lockheed said the charge did not change its outlook for earnings and cash flow from recurring operations in 2001 and 2002.
Wall Street analysts on average expect Lockheed to earn $1.45 a share this year and $1.76 a share in 2002, according to research firm Thomson Financial/First Call.
The charge reflects costs of severance and infrastructure reductions, value impairment related to some businesses and a $255-million write-down for its investment in Astrolink International. Astrolink is a joint venture with TRW Inc., Liberty Media Corp. and Telepazio of Italy.
About 650 jobs will be lost, Lockheed said.
