Northrop President Sugar to succeed Kresa as CEO

Wall Street applauds `the only correct choice'

February 20, 2003|By Robert Little | Robert Little,SUN STAFF

Northrop Grumman Corp., the nation's third-largest defense contractor and a major employer in Maryland, announced yesterday that Ronald D. Sugar will become chief executive officer April 1, taking on the job of integrating a company that his predecessor merged into an industry giant.

Sugar, Northrop Grumman's president and chief operating officer, will replace CEO Kent Kresa, who will reach the company's mandatory executive retirement age of 65 next month. Kresa will remain Northrop Grumman's chairman until Oct. 1.

While expected, the announcement was applauded on Wall Street as a continuation of the management that has guided Northrop Grumman into a leading role in the nation's defense technology business.

"It's really a logical choice - he's been an executive, he has a tech background, he's an extremely bright guy and very energetic," said Cai von Rumohr, a defense industry analyst for SG Cowen Securities Corp. "This is really the only correct choice the company could have made."

Sugar, 54, joined Northrop Grumman in 2001 when the company bought the shipbuilding and electronics manufacturer Litton Industries Inc., where he was president and chief operating officer. Before joining Litton, Sugar was an executive at the aerospace and electronics company TRW Inc., which Northrop Grumman acquired late last year. He has a doctorate in electrical engineering from the University of California at Los Angeles.

Once known primarily as a manufacturer of aircraft, such as the B-2 stealth bomber, Northrop Grumman today is the country's largest builder of warships and a top manufacturer of military electronics, satellites, flying drones and other technologies that have come to define the modern American military.

The company reported $17.2 billion in revenue last year, and expects as much as $26 billion this year when the sales from TRW are included. Company executives have said they envision sales of $30 billion or more by 2005. In the Pentagon's most recent ranking of defense contractors, Northrop Grumman ranked third behind Lockheed Martin Corp. and Boeing Co.

Northrop Grumman, based in Los Angeles, employs about 11,000 people in Maryland, and its largest division is based in Linthicum. The company's Electronics Systems sector near Baltimore-Washington International Airport, formerly a division of Westinghouse Electric Corp., manufactures radar and electronics for fighter planes including the F-16 and F-22, and for other defense systems.

Local employees said they have little contact with the chief executive, but they seemed to welcome the announcement that a well-regarded insider is assuming control.

"He's got decisions to make for the shareholders that aren't always going to make us happy," said Dennis Wilderson, president of the Salaried Employees Association, which represents about 750 Northrop Grumman employees in Maryland. "But the company has made some intelligent decisions, obviously, and they've invested an awful lot of money in Maryland. So we're happy to work with him."

Shares of Northrop Grumman closed yesterday at $93.29, up $1.50 in trading on the New York Stock Exchange.

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