Raytheon 4Q13 Earnings Call Notes

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A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Bill Swanson stepping down as CEO

“As you all know, I announced my intention to step down as Raytheon’s CEO, and the board appointed Tom Kennedy to be CEO, and Tom is on the call with us today”

Must continue to invest in R&D

“Since you asked me to reflect, one thing that I would say that I am concerned about as we go through this budget process, we seem to be protecting personnel and readiness, which is okay. Those can be bought back very quickly, and I’m going to be working hard to make sure that on the R&D side that we don’t take a lot of cuts in the budget there because, being an engineer, I know how long it takes for R&D to come to fruition. And we’re always a country that has invested in our capability, in war-fighting capability. I know Raytheon, even in the tough times when we had $13 billion in debt, we still invested, and that’s paying off in some of our wins as we look today, and we’ll continue to invest as a company. But I think as a nation, as we look at the — our investments, we’ve got to make sure that R&D is not sacrificed because you can’t buy back that time that you lose.”

It takes time to develop relationships and trust

“I mean, what I would do is remind everybody back to about 8 or 9 years ago when, I guess, we were talking about international. It’s not something you can flip a switch and turn on a light and have it instantaneously happen. So I appreciate people starting organizations and putting things in place, but it takes a while to establish your credibility internationally. And our customers really count on the fact that, I mean, we’ve been in the Mideast 50 years, Japan 50 years, Taiwan 50 years, Korea. I mean, these are the sort of things we’ve done for a long time, and your performance over that period really helps you capture new business. And it’s, to me, it’s all about relationships and trust, and that does not happen overnight.”