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Lockheed Martin: How does the company make money?

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About Lockheed Martin

Lockheed Martin (LMT) is a global security and aerospace company. It’s engaged in the research, design, development, manufacture, integration, and sustainment of advanced technology systems, products, and services. It has a 4.14% holding of the iShares Select Dividend ETF (DVY).

Lockheed Martin has many successful and time-proven programs under its belt—like the F-35 II Joint Striker, F-16 Falcon and F-22 Raptor, MH-60 and MK-41 Vertical Launching System, Aegis Combat System, TPQ-53 Radar System, Orion, and PAC-3. The F-35 program is Lockheed Martin’s largest program. It contributed 17% to net sales and 52% to the Aeronautics segment’s sales in 2014. The company routinely applies for and owns a substantial number of US and international patents related to its products and services.

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Vast clientele

Lockheed Martin’s major customer is the US government and its allied agencies. It accounts for 80% of Lockheed Martin’s revenue. As a result, the company depends heavily on the US economy and its growth. The rest of its clients are either international clients or domestic commercial companies.

Competitors

The company faces competition both domestically and internationally. Other companies in the aerospace and defense segment are Boeing (BA), General Dynamics (GD), Raytheon (RTN), and Northrop Grumman (NOC) in the US. It has various companies in the international market.

Business segments

The company operates in five major business segments:

  • Aeronautics
  • Information Systems & Global Solutions, or IS&GS
  • Missiles and Fire Control, of MFC
  • Mission Systems and Training, or MST
  • Space Systems

You can read Company overview: Should you invest in Lockheed Martin? for a detailed overview of the company. In the next part of this series, we’ll look at how each of these segments performed in the last quarter and the year as a whole.

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