Top 100: Raytheon weaves cyber into tight knit portfolio

Raytheon aims to stand apart from competitors as it develops a commercial cyber offering to complement its traditional defense work.

Raytheon has been laser-focused over the past 18 months on its cybersecurity business in an attempt to broaden and deepen its ability to help customers secure their domains. Simply put, cyber is an area where Raytheon is trying to pull ahead of the competition.

“The speed of the cyber domain evolution is, by any definition, remarkable,” said David Wajsgras, president of Raytheon Intelligence, Information and Services. “Exponential growth in the use of cloud computing, mobile devices and the Internet of Things are vastly expanding the types and frequency of cyber threats. Raytheon has strategically made changes in our business to stay ahead of the challenges and opportunities in this area.”

The Waltham, Mass.-based Raytheon contractor reported $23.3 billion in revenue for fiscal 2015, up slightly from $22.8 billion in fiscal 2014. Raytheon IIS, which has as its core markets information analysis, command and control, integrated engineering, modernization, training, and cybersecurity, posted $5.7 billion in sales last year. In the first quarter 2016, IIS generated revenue of $1.5 billion, of which significant portions were due to cybersecurity, special missions programs, and classified contracts, Wajsgras said.

On the 2016 Washington Technology Top 100, Raytheon is ranked No. 6 with $3.7 billion in prime contracts.

“Raytheon continues to perform well,” said Wajsgras. He said that Raytheon’s financial performance and the diversity of its product and customer portfolio, position it well for future top- and bottom-line growth.

Despite the budgetary challenges that defense and civilian agencies continue to face, Raytheon IIS sees a strong demand for cost-effective capabilities that address emerging threats, said Wajsgras. Specifically, he said that IIS is uniquely positioned to handle the modernization of platforms and systems and help agencies drive architectural commonality to allow for interoperability among new and existing systems.

To boost its cyber competencies, the company acquired computer security software services company Websense for $1.9 billion in April 2015. A number of related acquisitions last year, such as the purchase of firewall provider Stonesoft and cyber-hunting specialist Foreground Security, rounded out its cyber portfolio. To ring in the New Year, Raytheon rebranded Websense as Forcepoint in January.

“Forcepoint was created to empower organizations to drive their business forward by safely and securely embracing transformative technologies,” Wajsgras said. Forcepoint, which is built on the successful integration of Websense, Raytheon Cyber Products, and Stonesoft, can help government agencies deal with constantly evolving cybersecurity challenges, he said.

“Forcepoint brings a fresh approach to address the constantly evolving cybersecurity challenges and regulatory requirements facing businesses and government agencies,” Wajsgras said.

But Forcepoint is an investment in the future. From a revenue standpoint, comparing Forcepoint’s $328 million in sales last year to any of the other pillars of Raytheon’s business is like comparing a townhouse to a skyscraper. Integrated Defense Systems and Missile Systems produced $6.4 billion and $6.5 billion, respectively, in 2015. Raytheon Space and Airborne Systems posted $5.8 billion in sales last year.

Worth noting, 31 percent of Raytheon’s sales in 2015 were to international customers. “International sales continue to be a high-growth area for the company,” Wajsgras said, adding, “In 2015, we led our competitors with the highest percentage of international revenue.”

He said Raytheon is actively marketing its Converged Cyber platform, which offers managed security services and technologies for network protection, to its international customers. “Our [international] customers want to gain the same understanding of cyber issues as they do with other segments of their threat environments,” he said.

“Continued international expansion is a key growth opportunity for us, and our strong position in these markets provides a solid foundation to build upon,” he said.

Defense and intelligence work continue to sustain many of Raytheon’s traditional and core programs and capabilities.  “Our customers face an extremely complex and dynamic threat environment that remains unpredictable and unstable,” Wajsgras said.

Raytheon won a number of significant defense-related deals in the last 18 months.

The Space and Airborne Systems unit won a $1 billion contract in April with the U.S. Navy to support Increment 1 of the Next Generation Jammer, which would modernize enemy-radar jamming capabilities for the Navy’s EA-18G airborne electronic attack aircraft.

As for Raytheon IIS, it won a five-year, indefinite-delivery, indefinite-quantity contract in September 2015 valued at $1 billion to serve as the prime contractor to the U.S. Homeland Security Department. The company would head a team furnishing development and sustainment support to the department’s Network Security Deployment Division, which is responsible for the National Cybersecurity Protection System.

Raytheon IIS also won a $393 million deal in October 2015 with the U.S. Air Force to support the service’s Distributed Common Ground System, which is the service’s primary tool for analyzing data from manned and unmanned reconnaissance systems operating around the globe.

Also worth noting is Raytheon’s joint venture announced in January 2015 with General Dynamics known as the Range Generation Next (RGNext), which is a $2 billion program through which the two companies will support the U.S. Air Force’s two main launch ranges.

Yet another key win is Raytheon’s $700 million, multiyear IDIQ contract awarded by the Air Force in April 2015 to support operations at NORAD’s Cheyenne Mountain Complex.

“With recent wins that provide operations and system sustainment services for NORAD and NORTHCOM, as well as, U.S. Air Force launch services, we now deliver the entire Raytheon Space Value Chain,” Wajsgras said. “In this role we develop and support space operations, putting together all the parts, from cybersecurity, training and space launch, to satellite mission management, earth monitoring, remote sensing and data dissemination.”