Raytheon focuses growth on cybersecurity and warfighter training

Company maintains sure footing during rocky times

Raytheon Co. kept its 2009 revenue footing on increasingly treacherous defense-contracting terrain, with an 11-figure contract backlog of $37 billion, a 7 percent increase in revenue and an earnings per share increase of 24 percent compared to the previous year.

In late April, the company reported that profits from continuing operations during the 2010 first quarter climbed to $1.18 a share from $1.13 a year earlier. Net sales rose from $5.9 billion to $6.1 billion. Analysts had expected a profit of $1.10 a share on sales of $6.2 billion.

The company's success earned it the No. 4 spot on the 2010 Top 100, with $6.7 billion in prime contracts.

“There was no multibillion-dollar win last year,” said Steve Teel, senior vice president of Global Training Solutions, a unit of the Raytheon Technical Services Co. “But we had some good multimillion wins.” Teel said significant growth is coming in two main areas: cybersecurity and warfighter training.

In October 2009, Raytheon completed a $350 million buy of BBN Technologies, a defense and security firm based in Cambridge, Mass. The BBN portfolio spans an array of advanced networking, speech, language and information technologies, sensor systems, and cybersecurity. The new subsidiary is part of the company’s Network Centric Systems and operates as Raytheon BBN Technologies.

In December 2009, BBN received an $81 million contract from the Army Research Laboratory to create a collaborative technology alliance in network science. The five-year deal includes formation of a consortium of 30 university and industrial labs to study the diverse techno-ecology of communication, information, and social and cognitive networks.

“We see everything that’s happening in the cybersecurity arena as a positive growth opportunity,” Teel said. “The cyber threat is not going away. We believe we will be part of the solution.”

In its fiscal 2010 first-quarter report, Raytheon reported a sharp increase in earnings from the company’s space and airborne systems unit, which builds intelligence, surveillance and reconnaissance platforms for unmanned aircraft, and provides technical services, such as military training.

In February, Raytheon announced that it won a contract worth $886 million from the Air Force to develop a new element of the Global Positioning System, which will improve the accuracy of GPS satellite information. The upgrade will include anti-jam capabilities and improved security, accuracy and reliability. The work will be based on a service-oriented architecture that integrates government and industry open-system standards.

The Raytheon Technical Services unit, with 2009 sales of $3.2 billion, provides expertise to defense, federal and commercial customers worldwide. One key component of its training manifest is the Army’s Warfighter Field Operations Customer Support, or Focus, contract. Raytheon is in the third year of the agreement, which it won in 2007. If all options are exercised, the total program value could balloon to $11.2 billion over 10 years.

Focus has been billed as a landmark consolidation of the Army's live, virtual and constructive training operations and support systems. Raytheon provides personnel and infrastructure to train warfighters at 500 locations worldwide, and the goal is to boost their combat readiness and effectiveness.

Teel points to Focus as an ideal model for warfighter instruction: rapid adoption of Web-based e-learning to match the accelerating pace of training.

BOX
Raytheon Co.

Top 100 rank:  4

Top 100 revenue: $6,727,232,555

Leadership:

William Swanson, chairman and chief executive officer

Lines of business:

Integrated Defense Systems

Intelligence and Information Systems

Missile Systems

Network Centric Systems

Raytheon Technical Services

Space and Airborne Systems

Headquarters: Waltham, Mass.

www.raytheon.com


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