GTE sells 3 government units

General Dynamics Corp., a manufacturer of "heavy iron" military platforms such as tanks, submarines and fighter aircraft, placed a $1 billion bet last week on the future of digitized warfare with the purchase of the majority of GTE Government Systems.

General Dynamics, which manufactures M1 tanks for the Army, submarines for the Navy and F-16 fighters for the Air Force, sees the GTE Government Systems division providing it with added "synergies" to that weapons platform product line, according to company chairman Nicholas Chabraja.

He said that General Dynamics anticipates "significant growth opportunities in the defense electronics market" and called the acquisition "a solid addition to our defense core and a superb fit."

General Dynamics purchased the following divisions:

* GTE's Communications Systems Division, Taunton, Mass., which produces battlefield communications systems for the Army, the Air Force and the Marines.

* GTE's Worldwide Telecommunications Service Division, which provides engineering services for customers worldwide, including a heavy emphasis on users in the Defense Department.

* GTE's Electronic Systems Division, Mountain View, Calif., which provides mainly classified products and services to "black world" agencies.

General Dynamics did not purchase GTE's Chantilly, Va.-based Information Systems Division.

The GTE acquisition is expected to be completed this summer. Gordon England, General Dynamics' executive vice president and the head of the company's newly formed Information Systems and Technology Group, said the acquisition will well-position his company in the IT and communications arena, which he described "as the growth part [of DOD], which is growing at the rate of about 6 percent a year."

General Dynamics sees real opportunities for growth in the Communications Systems Division, which developed and fielded the Army's multibillion-dollar battlefield Mobile Subscriber Equipment communications systems. The Army is upgrading much of MSE to advanced technologies, such as Asynchronous Transfer Mode switches, and England said the GTE acquisition means that General Dynamics now can bid as a prime on such programs as the Army's War-fighter Information Network.

GTE's Communications Systems Division also provides the key computing engines for the Army's Force XXI battlefield digitization program through its Common Hardware/Software II contract. Thomas Meagher, an analyst with Boles, Knopf and Co., Middleburg Va., sees this program definitely providing General Dynamics with synergistic opportunities.

Pointing out that General Dynamics already has a piece of the digitized battlefield with computer systems installed in the M1 tanks, Meagher said the GTE acquisition will make General Dynamics a "big player" in the development of the digitized Army.

GTE, soon to be absorbed into Bell Atlantic under a pending merger agreement, decided to sell its Government Systems divisions to "focus on our core communications services" including local and long-distance telephone companies, according to company chairman Charles Lee.

GTE expects to complete the sale of the Information Systems Division within the next three to four months. Armen Der Marderosian, GTE's executive vice president for technology and systems, said his company believed it was "in the best interest" of that division and its 900 employees to seek a buyer "more closely aligned" with a company involved in the integration business.


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