Burnham leaves AlliedSignal for Raytheon helm Successor to Picard to make switch July 1

June 18, 1998|By BLOOMBERG NEWS

LEXINGTON, Mass. -- Raytheon Co. ended an almost yearlong search for a successor to Chairman Dennis Picard yesterday by naming AlliedSignal Inc.'s Daniel P. Burnham as president of the world's third largest aerospace company.

Burnham, 51, was among those considered likely to succeed Picard, who has been with the company for 43 years. Picard is also chief executive officer.

Burnham will join Raytheon July 1 as president and chief operating officer before becoming chief executive Dec. 1. Picard, 65, will remain chairman for no more than a year.

Burnham is vice chairman at AlliedSignal, a maker of aerospace and auto parts, chemicals, plastics and advanced materials based in Morris Township, N.J. It has operations in Towson and Columbia. He has run the aerospace division at AlliedSignal, the company's biggest business, since 1992.

Raytheon became No. 3 in the aerospace business last year when it completed $12.5 billion in acquisitions, most notably the $9.5 billion purchase of General Motor Corp.'s Hughes defense business.

Burnham will have the task of cutting costs and wringing higher profits from the company while invigorating a stock that has languished since the end of the year.

"He's the right person at the right place at the right time," said PaineWebber analyst Jack Modzelewski, who raised his rating on Raytheon yesterday to "buy" from "neutral."

"He's one of the classic nice guys who's going to do well in a company that needs tremendous cost-cutting and productivity from its employees."

Before yesterday, Raytheon's Class B shares had risen 3 percent since the end of year, during which time the Standard & Poor's 500 Index gained 12 percent.

Aerospace stocks haven't done well lately, and Raytheon also has been hampered as the Asian economic crisis cut into its engineering business, analysts said. Raytheon shares climbed $2.1875 yesterday, to $54.1875.

"He has a lot of credibility on Wall Street and with investors," said Babu Matthew, an analyst at American Express Financial Corp., which owns about 2 million Raytheon shares.

Raytheon, based in Lexington, Mass., said in January that it would cut more than 8 percent of its work force, or 9,700 jobs, and shut 20 defense facilities in the wake of its acquisitions. The cuts included 1,000 jobs from the engineering business.

Last year, Raytheon's profit before charges rose 8.3 percent to $848.5 million, or $3.55 a share, from $783.3 million, or $3.31, in 1996. Revenue rose 11 percent, to $13.7 billion from $12.3 billion for the same period.

Burnham is known for cutting costs. At an AlliedSignal meeting in January 1991, fresh off a quarter of record earnings, he ordered that a plan be crafted to cut overhead 25 percent.

"My speech was: 'Congratulations. If we keep doing what we are doing, we'll all be out of work in two years,' " he said in an October interview with Defense Week, an industry newsletter.

Burnham's challenge is to supervise the combination of the new defense businesses, led by William Swanson, while guiding the engineering business through tough times as overseas clients, especially in Asia, lack the funding to pursue projects.

"Dan is wonderful with customers, and to the extent that Wall Street is a customer, he'll be wonderful with them," said Frederic Poses, AlliedSignal's newly named president and chief operating officer.

Pub Date: 6/18/98

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