Lockheed Martin sees challenges ahead, but changes are underway as it adapts to new opportunities and market conditions.
To celebrate its 100th anniversary, Lockheed Martin Corp. spent 2011 accumulating a record $80.7 billion in order backlog and increasing net sales to $46.5 billion, up from $45.7 billion in 2010.
That success didn’t come in a gift box with a bow, however. A three-pronged strategy of performance, expansion into foreign markets and innovation in emerging markets led to Lockheed’s accomplishments, said Linda Gooden, executive vice president of Lockheed’s Information Systems and Global Solutions.
“Delivering results and meeting or exceeding our customers’ commitments is always a top priority for us,” Gooden said, citing achievements such as the Next Generation Identification System becoming operational in March 2011.
The system can process 10 fingerprints in about 10 seconds at 99.6 percent accuracy, she said, and replaces the FBI’s Integrated Automated Fingerprint Identification System.
Now the company can add another record to its roster, landing the No. 1 spot on the 2012 Top 100 list for the 18th year in a row with $17.4 billion in prime contracts.
Contract wins in varied market segments also played a big role in 2011.
In December, the National Science Foundation awarded Lockheed a $2 billion contract to operate and maintain the support infrastructure for the U.S. Antarctic Program, which enables universities, research institutions and federal agencies to conduct scientific research in the region.
On the defense side, the company won contracts totaling $1.06 billion from the U.S. Army Aviation and Missile Command for hardware and services associated with the Patriot Advanced Capability-3 Missile program.
In January, Lockheed won a $200 million Disability Case Processing System contract from the Social Security Administration to modernize SSA’s information technology and accelerate the processing of disability claims.
To bolster its burgeoning health information technology business, the company acquired QTC Holdings Inc., a California company that was the largest provider of outsourced medical evaluation services to the Veterans Affairs Department.
Despite those successes, however, challenges remain.
With 82 percent of last year’s net sales coming from the government, including 61 percent from the Defense Department, Lockheed officials are carefully monitoring the possibility of federal budget sequestration, which coupled with previous budget cuts, could reduce defense spending by almost $1 trillion between 2013 and 2021.
“We see a great opportunity for using some commercial technology to take costs out of the system and make government overall more efficient,” Gooden said. “We think that as we address this budget cycle, there will be ample opportunity to work with the government customers and help them move into the future.”
She said she sees potential in energy, big data and cyber. For example, the company teamed with the Energy Department to use green IT to reduce DOE’s carbon footprint through data center consolidation and effective use of a community cloud.
Lockheed also created LM Wisdom, a process that uses high-performance analytics algorithms to analyze in near real-time what’s happening across the social media spectrum.
Helping Lockheed move into the future will be Chris Kubasik, who will replace Robert Stevens as chief executive officer on Jan. 1, 2013, and Marillyn Hewson, who is replacing Kubasik as president and chief operating officer.
“My view – and I think the street’s view – has been that it did a fantastic job with their succession planning and implementation,” said Patrick McCarthy, managing director at FBR Capital Markets & Co., speaking of the leadership transition. “I think people were very comfortable with the old leadership, but clearly they’re very comfortable with the new leadership as well.”