BETHESDA, Md. (Reuters) - Defense and aerospace giant Lockheed Martin Corp. warned on Friday that profits will be lower than expected next year, prompting the departure of its president, who acknowledged he was responsible for the downturn.
The company said President and Chief Operating Officer Peter Teets is retiring and will resign from the board. "I am extremely proud of my long and cherished association with ... this great company of Lockheed Martin,'' Teets, 57, said in a statement. "The difficult times we have seen are not indicative of the company's real potential, and I feel I must step up to being accountable for our disappointing financial outlook for 2000.''
The company expects earnings in 2000 to be about $1 per diluted share, excluding the effects of non-recurring and unusual items. Free cash flow estimates for 2000 were under review, but are expected to be less than $500 million.
In early June, Lockheed Martin estimated 2000 earnings of at least $2.15 per share and free cash flow of $900 million.
Lockheed shares dropped 5-5/16 to 17-5/8 on Friday on the New York Stock Exchange.
On Friday, it cited softness in the commercial space business, increased investments in new advanced launch vehicles, program delays in its system integration unit, failure to win contracts in areas such as future imagery architecture, and some satellite and launch delays.
The reduced estimates were disclosed in its third-quarter report. The company posted operating profits of 48 cents per share in the quarter, just ahead of the consensus estimate of 47 cents as compiled by First Call/Thomson Financial.
Net income was $217 million compared with $318 million a year ago, and sales fell to $6.16 billion from $6.35 billion last year.
Sales in its space systems business fell to $1.4 billion from $1.6 billion, and to $1.2 billion from $1.5 billion in aeronautical systems, which makes F-16 fighters and C-130 cargo planes.
Chairman and Chief Executive Vance Coffman will also assume chief operating officer duties, effective immediately. Coffman and company director Eugene Murphy will co-chair a search committee for a new COO.
Teets was named executive vice president and chief operating officer in April 1997 after serving as chief operating officer of Lockheed Martin's information and services sector. He received the title of president in July 1997.
Teets joined Martin Marietta, one of Lockheed Martin's predecessor companies, in 1962 as an engineer and rose to head its Aerospace Group in 1985.
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