Lockheed Martin CorporationLMT announced that it will lay off 500 employees at its Information Systems & Global Solutions ("IS&GS") segment by mid-November of this year due to a shift in government priorities and changing industry dynamics as well as to increase the segment's competitive edge.
Lockheed Martin employs about 112,000 people worldwide, with about 24,000 working under IS&GS itself. The segment has however been under pressure due to a decrease in government spending, intensifying competition and delayed contracts. The move includes both voluntary and involuntary layoffs and is expected to affect less than 1% of the company's total workforce.
In Jul 2015, the aerospace and defense giant made an announcement regarding a strategic review of its government IT and tehnical cservices businesses, emphasizing particularly on the IS&GS business. IT and technical service segment with annual revenues of $6 billion and 17,000 employees were expected to be a part of this review. However, the company has now said that the latest headcount reduction is not related to the business review.
According to Lockheed, the decision to cut jobs was aimed at the optimization of resources and aligning them to suit customer demand and business climate better.
Earlier in Nov 2013, Lockheed Martin had announced 4,000 job cuts over the period of next 18 months due to the company's ongoing restructuring of its space business and the uncertainties related to domestic and international defense spending.
Like Lockheed Martin, many defense contractors have had to lay off thousands of workers over the past few years because of the constrained budget environment in the U.S., and the consequent delays and cancellation of new contracts.
Zacks Rank
Lockheed Martin currently has a Zacks Rank #2 (Buy). Other favorably placed stocks in the aerospace and defense sector are Leidos Holdings, Inc. LDOS , Northrop Grumman Corporation NOC and Engility Holdings, Inc. EGL . While Leidos sports a Zacks Rank #1 (Strong Buy), Northrop and Engility carry a Zacks Rank #2 (Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
