Lockheed Martin Corp’s (LMT.N) decision to buy helicopter maker Sikorsky Aircraft and sell $6 billion in lower-margin units marks a clear turning point for Lockheed CEO Marillyn Hewson, who is shaking up the world’s largest weapons maker.
Thrust into the CEO job in January 2013 after retiring CEO Robert Stevens’ designated successor was fired for having an affair with a subordinate, Hewson spent her first year largely executing a strategy Stevens had mapped out and repairing tense ties with the Pentagon on the $391 billion F-35 fighter program.
Over the past 18 months, the seemingly mild-mannered engineer who is ranked No. 4 on Fortune’s list of most powerful U.S. women executives, has grown more assertive, her power buoyed by a powerful share price rally that has earned her the respect of her board and key shareholders.
Lockheed shares closed at $202.79 on Wednesday, not far off a historic high of $207 reached in February.
“It’s a great story. The accidental CEO steps in, doubles the share price, raises margins and then executes the biggest M&A deal the company has done in two decades,” said one industry executive familiar with Hewson’s career. “But remember, the higher you aim, the greater the crash if things don’t work out.”
Indeed, the Sikorsky acquisition could test the 61-year-old executive’s legacy of pleasing investors by running a tight ship.
Everyone loves to bash LMT. Cost overruns, bloated programs, timeline shifts and a reputation for getting the DoD to buy what LMT wants to make, rather than making what DoD wants.
Having said that, Hewson really has done some good work at the defense giant. For instance, as a program, the F-35 has improved greatly since she took the helm.
We’re not wild about Sikorsky being assimilated by the Borg of the defense industry. The article notes the flagship product of the Sikorsky line as the MH-60R and MH-60S helos. But that somehow overlooks the ongoing UH-60M production, and what’s likely to be a fairly lucrative production line for the CH-53K, slated to have its first flight later this year, and eventually replace the Marines CH-53E fleet.
DoD is also starting the Future Vertical Lift program, which is, as we feared, shaping up to become the giant program of programs that so well fit the LMT business model.