The board of directors of Lockheed Martin Corp. met yesterday to consider shedding businesses worth at least $1 billion and removing at least one layer of top management at the Bethesda aerospace giant.
Company officials declined to comment on the options under review, but sources said one possibility is selling a portion of the company's Manassas-based space and electronics unit. The business makes radiation-resistant computers for use in space and is part of a larger unit that employs 900 people. The other part of the operation, which has about 800 workers involved in undersea-warfare technology for the Navy, is not believed to be on the block.
The board meeting was the final step in a previously announced plan to get the troubled company back on track. For more than a year now, the $26 billion company has been struggling with earnings shortfalls, losses of key Pentagon contracts and the departure of a top executive.
Lockheed chief executive Vance Coffman has vowed to restore the company's credibility with Wall Street, which was shattered last fall when he surprised analysts by announcing the company would fail to meet earnings predictions, barely weeks after it had said it would.
Company officials would not comment on the board's actions but may announce details of the revamping as early as Monday.
Shares of Lockheed, meanwhile, continued to slump. The stock briefly touched a new 52-week low of $31 a share yesterday before closing at $31.43 3/4, down 1 3/8. Lockheed shares have lost nearly a quarter of their value since the beginning of the year.
Merrill Lynch & Co. analyst Byron Callan said the stock could fall further if investors perceive the board's plan as inadequate.
Callan also said the company has far more riding on winning final approval of a $6 billion sale of F-16 fighters to the United Arab Emirates and persuading Congress to restore $1.8 billion in appropriations cut by the House for Lockheed's new F-22 supersonic fighter.
Sources said Lockheed's top management has considered a variety of asset sales and management streamlining, with some much more far-reaching than others. The options include eliminating the firm's energy and environmental-services business, selling its Sanders defense-electronics business as well as some smaller operations that are considered "non-core" to its primary aerospace and information-services businesses.
One operation considered safe is Lockheed's Global Telecommunications subsidiary, which was formed last year and is in the middle of acquiring Bethesda neighbor Comsat Corp.
Coffman is under enormous pressure from the investment community to streamline the company, which was built over the past six years in a wave of acquisitions. Inside the company, Coffman is alternately viewed as struggling mightily to integrate a complex mix of diverse businesses he inherited from his predecessor, Norman R. Augustine, or as a poor communicator who lacks the visionary leadership required to run such a vast enterprise.
Coffman himself has said top management has not always been able to get a clear picture of what is happening throughout the firm's many divisions and business units.
A recent company-sponsored critique of Lockheed's space businesses found "systemic" quality-control problems throughout the space sector, suggesting the company had emphasized post-merger cost cutting at the expense of quality and oversight.
The recent loss of a top-secret satellite-manufacturing and services contract from the National Reconnaissance Office to arch rival Boeing Co. has only deepened investors' anxiety about the company's prospects, analysts said.
The loss of the spy-satellite deal came after other high-profile failures at the company during the past 18 months. These include having its $11.6 billion takeover of competitor Northrop Grumman Corp. blocked by the Pentagon, the loss of a contract to build a new generation of expendable rockets, and several launch failures of Air Force and private-sector rockets and satellites.
Staff writer Amy Joyce contributed to this report.