Lockheed Martin Corp. announced yesterday that Thomas A. Corcoran, president and chief operating officer of its space business, is retiring to become chief executive of Allegheny Teledyne Inc., a Pittsburgh industrial conglomerate.

Corcoran, 55, had been viewed both inside and outside Lockheed as a potential chief executive of the $26 billion Bethesda aerospace giant.

A former veteran General Electric Co. executive known as a demanding and results-oriented manager, Corcoran took over Lockheed's critically important $7.5 billion satellite and missile business in October after a problem-plagued period. These included several failures of a controversial antimissile weapon for the Air Force, delays in deliveries and launches of satellites, and the loss of a key rocket contract to arch rival Boeing Co.

The company's rockets suffered a string of malfunctions last year and early this year, causing more than $2 billion worth of damage to military and intelligence agencies' reconnaissance satellites.

Next week, Lockheed is expected to publicly release an independent panel's report criticizing the company for failing to adequately supervise its workers and for putting too much emphasis on cost reduction at its space businesses.

Corcoran previously headed Lockheed's electronics unit, the company's second-largest, with $7.3 billion in sales, managing to more than double its sales and substantially increase its profit margins during his tenure. He was widely lauded on Wall Street and frequently mentioned as a possible successor to Lockheed's chairman and chief executive, Vance D. Coffman, who has had a rocky relationship with the investment community.

"Tom was really viewed as Mr. Turnaround at the company," said Merrill Lynch & Co. analyst Byron Callan. "I am surprised by it, and it creates another hole for them to fill in the space business."

Albert E. Smith, who runs Lockheed's main space and missiles division in Sunnyvale, Calif., was named acting head of the sector.

Corcoran's departure comes at a time when shareholders are unhappy with Lockheed's financial performance and its stock price, which is down nearly 12 percent this year. Shares closed yesterday at $36.81 1/4, down 6 1/4 cents.