Lockheed braces for declining IT sales in 2012

The company's IT business was hit by budget pressures that kept agencies from spending as much on IT in 2011.

Lockheed Martin Corp. expects sales in its IT division to continue downward in 2012 as it did in 2011, during which net sales decreased by 5 percent.

Sales in the company’s Information Systems and Global Solutions (IS&GS) segment decreased $92 million, or 3 percent, during the forth quarter, which ended Dec. 31, compared to the last quarter of 2010. It also declined by $540 million, or 5 percent, for all of 2011, compared to the previous year, according to financial figures released Jan. 26.

Overall though, the business segment was hit by the fiscal pressures the government is under, which keep agencies from spending as much on IT products and services in 2011. Executives expect the segment's annual operating margins in 2012 to be similar to the annual 2011 figures.

“The corporation expects that continued budget pressure in the government IT market will contribute to lower sales in 2012, compared to 2011,” the company said.

For Lockheed overall, the company reported fourth-quarter net sales of $12.2 billion, compared to $12.8 billion in 2010. Earnings from continuing operations during the fourth quarter were $698 million, compared to $821 million in 2010.

In its IS&GS segment, Lockheed had about $120 million less in volume of sales during the quarter. Sales were down by $665 million for the entire year.

The financial numbers were down because of the conclusion of the Decennial Response Integration System program, which supported the 2010 U.S. Census and less spending on the Airborne Maritime Fixed Station Joint Tactical Radio Systems program. However, the decreases were offset somewhat by increased sales in other programs.

Operating profit in IS&GS increased in the fourth quarter and for the year overall. In the last quarter, profit increased $55 million, or 28 percent, and $60 million, or 7 percent, for the year compared to the corresponding periods in 2010.

Company executives foresee the coming year putting more pressure on them.

“We will need to remain agile in 2012 given the uncertainties ahead, but I am confident that our workforce and diversified portfolio will enable us to continue to deliver value to our customers and shareholders,” said Bob Stevens, chairman and CEO of Lockheed Martin.