Northrop-Grumman to close resale unit

BUSINESS DIGEST

March 07, 2006|By BLOOMBERG NEWS

NEW YORK -- Northrop Grumman Corp., the second-largest provider of computer services to the federal government, will close its Greenbelt-based computer-resale unit, which employs 365 people.

Northrop said Jan. 24 that it intended to "exit" the business, either by selling the unit or closing it. At the time Chief Executive Officer Ronald Sugar said the business was "no longer a strategic fit" for Northrop.

The Los Angeles-based company received offers from as many five other companies to buy the business but felt a sale would take too long, company spokeswoman Juli Ballesteros said yesterday.

"There were some contingencies in each of those offers that made it not viable for us to exit that market quickly and efficiently," she said.

The unit, which resells computer equipment from manufacturers such as Cisco Systems Inc. and Hewlett-Packard Co., employs about 300 in Greenbelt, mostly salespeople and some engineers.

Northrop, whose electronics business is based in Linthicum, is one of the largest employers in Maryland. The defense contractor will continue installing secure computer networks and providing support services after it closes the hardware-resale unit, Ballesteros said.

"It's a business that really has no direct synergism with anything else they're doing," said analyst Paul H. Nisbet of JSA Research. "They just figured it's more of a problem to them than it's worth."

The company expects 30 percent to 40 percent of the unit's employees to transfer to other parts of the company, Ballesteros said.

There are about 1,000 job openings in Northrop's information technology unit for which employees in the Greenbelt unit will be eligible to apply, said Northrop spokesman Randy Belote.

In January, Northrop cut its 2006 sales forecast to about $31 billion, from a previous forecast of $32 billion, to reflect the expected sale.

Shares of Northrop fell $1.01 to $64.78 in New York Stock Exchange composite trading yesterday.

Sun reporter Paul Adams contributed to this article.

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