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Defense Paid Off For Raytheon Chief -- WSJ

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11/09/2019 | 02:48am EST

By James R. Hagerty

When Dennis Picard became chief executive of Raytheon Co. in 1991, the maker of Patriot missile-defense systems and other military gear was laying off workers. The end of the Persian Gulf War and the collapse of the Soviet Union pointed to a drop in U.S. defense spending.

Mr. Picard considered buying a big engineering-services company to reduce dependence on the military. He and his colleagues kicked around the idea of selling Raytheon's defense business. But he finally decided weaponry was the company's heritage -- and doubled down on it.

In early January 1997, outmaneuvering rival bidders, Mr. Picard announced within 10 days two major acquisitions, landing the defense operations of Hughes Electronics Corp. and Texas Instruments Inc. for a total of nearly $13 billion.

Raytheon gained another 22 years of independence. It now is preparing to merge with United Technologies Corp. to form Raytheon Technologies Corp.

Mr. Picard, who died Oct. 21 at age 87, relished some of his less-noticed feats, such as catching a bluefin tuna off New England in the early 1990s. It weighed more than 500 pounds. Though most of the fish was sold for sushi, he had the tail preserved and mounted on a wall at his home in Harwich, Mass.

An engineer by training and temperament, he kept up with the minutiae of designing and manufacturing Patriot missiles and other Raytheon hardware. "God is in the details" read a plaque in his office.

When he presided over meetings to review Raytheon projects, "we'd call it root canal," said Ed Woollen, who reported to Mr. Picard. "He'd drill down and drill down till we got to the root of the problem."

Mr. Picard aimed to expand Raytheon's nonmilitary businesses as a buffer against fluctuating demand for munitions. Then, in 1993, when it seemed that the Cold War had been won, the Pentagon urged its contractors to consolidate, creating larger and financially stronger companies.

Mr. Picard decided that Raytheon would be a predator, not prey, in the merger wave that ensued. He sold the Amana home-appliances business and D.C. Heath, a publisher of textbooks, to bolster Raytheon's finances.

Mr. Picard, who retired as chairman of the Lexington, Mass.-based company in July 1999, also waded into politics. In the mid-1990s, he threatened to move Raytheon manufacturing out of Massachusetts unless the state, unions and local utilities agreed to provide the company $600 million in cost savings over five years. Unions accepted a three-year wage freeze, utilities reduced their rates and the state gave it tax breaks of about $20 million a year.

"I'm not a bully, but I'll agree with you that I'm a tough guy, a forceful guy," Mr. Picard told the Boston Globe in 1999.

Dennis Joseph Picard was born Aug. 25, 1932, and grew up in North Providence, R.I., where his father worked in a wool mill. He attended La Salle Academy, a Roman Catholic school in Providence. "I was a punk kid, and the Christian Brothers let me know I was a punk kid," he told the Globe. "They straightened me right out."

Service in the Air Force gave him experience with radios and a posting in Libya. He also studied broadcast engineering at the RCA Institutes in New York and set up a TV-repair business in his father's basement.

In 1953, he married Dolores Petit, whom he had met at a dance. Two years later, during a job-hunting trip, he got lost on his way to a Sylvania Corp. plant. A policeman pointed him toward a Raytheon plant and told him that company was hiring. He got a job as a factory technician.

Early in his career at Raytheon, he went to night school at Northeastern University and earned degrees in electrical engineering and management. At Raytheon, he became a specialist in radar systems. In 1983, the company promoted him to head its crucial missile division. His biggest priority was to fix engineering problems with the Patriot. His success in that role helped him win the CEO job in 1991.

The acquisition of the Hughes defense business in 1997 required the company to mesh two large organizations with very different cultures and procedures. "It was like the Red Sox and Yankees suddenly having to work together," Mr. Picard said later.

The company's struggle to digest the acquisitions persisted for years. Three months after he retired in 1999, Raytheon slashed its forecasts for profit and revenue, and the stock price fell 44%.

Mr. Picard is survived by five children, eight grandchildren and four great-grandchildren.

His son Dennis Picard Jr. remembers a fishing trip with his father at a reservoir in Massachusetts. Dennis Jr. was about 8 years old, and it was a rare Saturday off work for his father. They rented a row boat and bought pickled pork rinds as bait.

Dennis Sr. felt a tug on his line and began a long struggle to pull in the fish. When the boat began drifting, he ordered his son to row hard and keep it from shore. Then he told Dennis Jr. to grab the net and help bring in a largemouth bass.

When Dennis Sr. brought the fish ashore, other fisherman praised his catch. He told them he wouldn't have caught the fish without help from his son. "He shared the accolades," Dennis Jr. said. "That was his character."

Write to James R. Hagerty at bob.hagerty@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
HUNTING PLC -0.98% 402.4 Delayed Quote.-15.38%
RAYTHEON 0.06% 215.9 Delayed Quote.40.73%
TEXAS INSTRUMENTS 0.72% 117.06 Delayed Quote.22.86%
UNITED TECHNOLOGIES CORPORATION 0.05% 147.45 Delayed Quote.37.73%
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Financials (USD)
Sales 2019 29 309 M
EBIT 2019 4 822 M
Net income 2019 3 322 M
Debt 2019 262 M
Yield 2019 1,72%
P/E ratio 2019 18,2x
P/E ratio 2020 16,6x
EV / Sales2019 2,06x
EV / Sales2020 1,86x
Capitalization 60 099 M
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Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 17
Average target price 226,71  $
Last Close Price 215,81  $
Spread / Highest target 22,8%
Spread / Average Target 5,05%
Spread / Lowest Target -9,64%
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RAYTHEON40.73%60 099