Reading on Raytheon

At 14 of the nation's major airports last week, big new radar installations of spinning antennas and scanning screens were being readied for use as part of a $13 million radar network that will eventually help control air traffic around 27 major U.S. cities. On Wall Street many a brokerage house tuned in with its own radar to take a reading on the firm responsible for the network: Raytheon Manufacturing Co. of Waltham, Mass. They liked what they saw so well that Raytheon stock moved to an alltime high of $30 a share.

Last week Raytheon won a $6,000,000 contract for the electronic controls of the Navy's new surface-to-air Tartar missile, announced a $6,000,000 contract for development of a radically new sonar system for atomic submarines. To manufacture top-secret communications equipment for the Air Force, the firm is shopping around for a huge new factory that will add one-sixth more capacity to its plants, which are scattered from Massachusetts to California.

"Make Some Money." Raytheon was founded in 1922 by famed Massachusetts Institute of Technology Scientist Vannevar Bush and his onetime Tufts roommate, Laurence K. Marshall. It remained a midget until World War II, when its sales rocketed from $4,400,000 to $173 million. But the firm came so near to disaster in the postwar defense slump that its directors called in Yankee Banker Charles Francis Adams, of the famed Massachusetts Adamses, to put it back in shape. (Marshall resigned in 1948.) Adams found a storehouse of talented scientists. But they loved research more for its own sake than for profit. Adams began searching for ways to put their talents to work making money, later cut out such money-losing items as TV sets, decided that Raytheon's future lay in increasing Government work. He brought in Harold Geneen, former vice president of Jones & Laughlin Steel Corp., as executive vice president in 1956, told him: "Make some money."

Geneen rattled the structure of Raytheon so completely that the dust has just started to settle. He found "a $200 million operation with management enough to run only a $20 million company," a history of cases in which Raytheon developed and marketed a product only to lose out when hit by competition. To solve such problems, Geneen brought 32 executives into new management spots, reorganized the company into seven divisions, set a controller over each to exercise searching financial control.

Keep It Fluid. While it was changjng its pace, Raytheon really went after military contracts, now does 80% of its business with the Government. It is the only U.S. electronics firm with prime contracts for two mass-production missiles (the Army's ground-to-air Hawk and the Navy's air-to-air Sparrow III), is subcontractor for electronic devices for twelve other missiles and for equipment for the 6-52 and the 6-58. It is also manufacturing transistors, and their successor spa-cistors, for everything from field radios to satellite innards, hopes to raise its $60 million-a-year civilian business to $150 million by 1965 with such items as weather radar, tiny radar sets for pleasure boats, diathermy equipment for hospitals.

Adams and Geneen keep the company fluid against any change in the defense cycle by turning over their working capital fast (six times a year), keep to a minimum the money tied up in fixed assets or long-range projects. The formula has put peacetime muscles on the onetime war baby. From 1948 sales of $53.7 million and profits before taxes of $730,000, the company rose last year to sales of $259 million and profits of $11 million. Sales and profits the first quarter were up more than 50%. The backlog also rose during the quarter from $260 million to $350 million. Estimated earnings for this year: $2.50 a share v. last year's $2.42, which included a nonrecurring profit of 72-c-. Says Geneen: "There is nothing in the picture to suggest we'll be doing less than one-half billion dollars in business in the next three or four years."

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