Litton Industries Inc. plans to sell its defense electronics unit and focus on its shipbuilding, information security and telecommunications businesses. The Advanced Electronics unit, which specializes in navigation and electronic warfare, had $1.6 billion in revenues in fiscal 2000, or about 28 percent of Litton's total revenues of $5.6 billion. It has about 9,500 employees.
The evaluation, Litton said, indicated that the defense electronics unit would produce more value in the hands of a company focusing on similar areas. Analysts had previously said the defense electronics unit was experiencing cost overruns on some contracts.
After the divestiture, Litton said it will have revenues of about $4.3 billion, with operations in commercial electronics, information technology, and military and commercial shipbuilding
The company said it hired Merrill Lynch
as its adviser for the sale.
Woodland Hills, Calif.-based Litton said it would use the funds from the sale to pay down debt, buy back shares and make internal investments.
Litton also said it believes it can increase the growth rate of its commercial electronics and materials business over the next two to three years by making investments to increase global production capacity and broaden its product offerings for the telecommunications and networking markets.
It will also move to new, high-tech products, such as circuit boards, connectors, laser crystals and fiber optic components.
In information systems, Litton will continue serving the Defense Department, but will also move into serving civilian segments of the federal government.
In shipbuilding, Litton, the largest builder of non-nuclear ships for the U.S. Navy, said it would pursue new opportunities, including a new class of destroyers and amphibious ships, as well as refurbishing and modernization.