Lockheed Martin Creates Commercial Unit

After numerous acquisitions and restructurings, Lockheed Martin has finally put the pieces together for the commercial infotech market

P> One year after completing the largest defense merger of the 1990s, Lockheed Martin Corp. of Bethesda, Md., finally found a strategy to tackle the commercial infotech market.

Lockheed Martin has gathered seven previously disparate commercial infotech units and put them under the helm of Gary Mann, a 25-year veteran of Lockheed. Combined sales of the new Commercial Systems Group are $1.8 billion.

"Our corporation is mostly structured to deal with defense and military contracts, and this new group will focus with speed on the commercial requirements to do business," said Mann, president of the new group. "The commercial information technology marketplace has a significant growth rate, and this will help us compete."

But Mann could not say how much a commercial strategy will play into the company's overall business plan. The $23 billion giant does only about 11 percent of its business in the commercial market. By contrast, 63 percent of sales come from defense work, 9 percent from NASA and the federal government and 17 percent from international sales.

Meanwhile, Mann said Peter Bracken, who led the company's former information sciences group, will retire in May. Bracken led three Martin Marietta commercial infotech companies. Two have been dissolved, and the third, Integrated Business Solutions, is part of the new Lockheed Martin commercial group.

Two other top managers, Joseph Cleveland, president of Enterprise Information Systems, and John Hallal, president of Martin Information Systems, who reported to Bracken, will report directly to Peter Teets, president and chief operating officer of the company's information and technology services sector.

Despite the variety in the technologies offered by each of the seven companies -- one makes arcade graphic boards for Sega video games and another makes add-on boards for personal computers -- Mann said it will help to break away from the traditional Lockheed Martin infrastructure geared to government business.

One of the seven companies in the group, CalComp of Anaheim, Calif., which designs and makes computer peripheral products, this week announced it would merge with Austin, Texas-based Summagraphics Corp., which is in the same business. Lockheed Martin would own 90 percent of the combined company.

But Mann said the deal had been on the table for several years and said his strategy for growth does not include a flurry of acquisitions.

For some, it only makes sense that Lockheed Martin, which is in the process of buying all of New York-based Loral Corp.'s infotech business, would move rapidly into the commercial infotech business. A spokesman for one major competitor said the recent activity is only a rejuvenation of failed efforts by Martin Marietta Corp., which prior to its merger with Lockheed tried to move into the commercial sector a couple of years ago.

"From my perspective it's not that big of a deal for a company that is [worth] $23 billion and -- with the Loral Corp. merger -- will be a $30 billion company," said Peter Aseritis, an analyst at New York-based First Boston Corp. "This is what we expected them to do all along -- to reorganize and consolidate. We expect many more new reorganizations into this type of entity."

Ron Meder, a spokesman for Lockheed Martin, said the company is moving toward more commercial markets in the wake of more than 1 million people losing their jobs in the aerospace industry since 1987. But he emphasized that the new infotech commercial group is only one element of Lockheed's overall commercial business.

The $1.8 billion group may represent only a small percentage of Lockheed Martin's overall sales, but in one reorganization the nation's top defense contractor has created a major commercial infotech player. The commercial market is dominated by the likes of Electronic Data Systems Corp., Plano, Texas, which generated $8.5 billion in commercial business in 1994, and Computer Sciences Corp., El Segundo, Calif., with $2 billion in commercial infotech sales in 1995.

Lockheed Martin's Commercial Systems Group

- Real 3D, Orlando, Fla., makes arcade graphics boards used in video games.

-CalComp, Anaheim, Calif., designs and manufactures computer peripherals.

-Formtek, Pittsburgh, develops and integrates information management systems for aerospace and defense agencies.

-Integrated Business Solutions, Orlando, Fla., provides computer outsourcing services to commercial customers.

-Lockheed Martin Commercial Electronics, Hudson, N.H., makes circuit boards and electronic products for computers.

-MountainGate, Reno, Nev., develops and makes data storage products.

-Access Graphics, Boulder, Colo., provides computer distribution of open client/server computing solutions.

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