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Raytheon Restructures

Monday - 3/25/2013, 5:24pm  ET

Raytheon is restructuring. On Monday, the defense contractor announced plans to consolidate its businesses and streamline operations. Effective April 1, Raytheon intends to run four main divisions:

  • Missile Systems, the company's largest division by revenues at $6.5 billion, will continue to be run by its president, Dr. Taylor W. Lawrence, and will include the company's Combat & Sensing Systems business and Raytheon U.K. subsidiary.
  • Space and Airborne Systems will be tied for second place at $6 billion. It will include the Integrated Communication Systems and Advanced Programs business and be run by President Richard R. Yuse.
  • Integrated Defense Systems will be of similar size at $6 billion annual revenue and will be headed by President Daniel J. Crowley. It will include two new businesses within it: C4I Systems and Air Traffic Management.
  • Finally, a new Intelligence, Information, and Services division will be formed by combining Intelligence and Information Systems and Raytheon Technical Services. It will be run by President Lynn A. Dugle and Vice President and General Manager John D. Harris II. Annual sales at this division should approximate $5.5 billion.

Total headcount reduction as a result of the restructuring should not be more than 200 out of Raytheon's 67,800 employees. As a result, severance charges should be insignificant and Raytheon says the restructuring will not affect 2013 guidance. Longer term, Raytheon expects the restructuring to save it as much as $85 million in annual costs.

Incidentally, as part of the restructuring, Raytheon noted that it is promoting Dr. Thomas A. Kennedy out of his position as president of Integrated Defense Systems and making him executive vice president and chief operating officer of the whole company. Daniel Crowley will thus be succeeding him as head of IDS.

Raytheon shares responded somewhat negatively to the shakeup, declining 0.5% in Monday trading to close at $56.76.

This article was originally published as Raytheon Restructureson Fool.com

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