After five months of anxious waiting on Wall Street, Lockheed Martin Corp. hired a top General Motors Corp. executive yesterday to preside over the $25 billion defense contractor's day-to-day operations.
Louis R. Hughes, an executive vice president at GM and former president of its $36 billion international operations, will take over as Lockheed Martin's president and chief operating officer April 27. He replaces Peter B. Teets, who resigned in October.
As president of Bethesda-based Lockheed Martin, Hughes, 51, will fill a seat that has long been considered a grooming area for the ultimate replacement of the company's Chairman and Chief Executive Officer, Vance D. Coffman.
Lockheed Martin officials were quick yesterday to dampen any suggestion that Hughes is expected to climb higher. "That did not come up in discussions -- he was hired as COO, and nothing else is planned," said spokesman James Fetig.
But while speculation about Coffman's ouster has waned as the company's operational performance has improved over the past several months, Lockheed Martin faces a year of flat earnings. And when Teets resigned last year, accepting blame for a surprisingly bleak financial outlook, industry watchers suspected widely that the company would use Coffman's job as a lure for finding Teets' replacement.
"Certainly that's got to be the question on the mind of anyone who's going to accept that job -- whether they're next in line for CEO," said Sam Pearlstein, an analyst for First Union Securities in New York.
He added: "I don't know the answer to that question."
At GM, Hughes was head of international operations for the largest corporation in the United States. He held the position through most of the 1990s, negotiating joint ventures with Toyota and Suzuki and guiding expansion into Eastern Europe, a spokesman for the auto manufacturer said.
Hughes' job was eliminated in 1998, when GM merged its international operations with its North American operations, but he remained as executive vice president and head of new-business strategies. Most recently, he has overseen the company's bid to buy the South Korean automaker Daewoo Motors Inc.
"Lou Hughes has been one of our most capable executives," GM Chairman John F. Smith Jr. said in a statement released yesterday. "His accomplishments have been strategically vital."
At Lockheed Martin, Hughes will report directly to Coffman and will oversee the company's core business areas -- aeronautics, space systems, systems integration and technology services -- and its telecommunications subsidiary.
The heads of those divisions, along with company Chief Financial Officer Robert Stevens, will report to the Office of the Chief Executive, which will include Coffman and Hughes.
After a year of failed rocket launches, delayed aircraft deliveries and disappointing financial performance, Lockheed Martin recently trimmed 4,500 workers from its payroll and consolidated its aircraft and satellite businesses to cut costs. And while executives predict stagnant earnings growth this year, analysts say some of the company's fortunes might have begun to turn.
It recently announced the sale of $8.5 billion worth of F-16 fighter jets to Greece and the United Arab Emirates, and a favorable nod from Congress this year should allow Lockheed to purchase a majority stake in the Comsat satellite network.
"Lockheed Martin is a world-class organization and a national asset," Hughes said.