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Sat, Jan 14, 2012

Textron May Shed Some Businesses In Reorganization

Unclear Which Divisions Might Be Spun Off The Company

Textron has begun a strategic review of its business areas, which includes Cessna aircraft, Lycoming engines, and Bell Helicopter.

While the company is playing any reorganization very close to the vest, CEO Scott Donnelly has said historically that the company has no interest in divesting its self of Cessna, according to a report in the Wichita Eagle. Donnelly made that statement in 2009.

The review comes as investors are generally bringing pressure on companies which do not perform to expectations, and defense analyst Loren Thompson with the Lexington Institute told the Eagle that Textron has underperformed the S&P 500 Index. She said that means management must respond even if they think such tactics as divesting business units are a bad idea.

Textron would be likely keep Cessna and Bell, the latter because of its V-22 program which fills a unique niche in the defense department. But Thompson said that if the financial and management structure of the company shifts significantly, research and investment in weapons systems might be "constrained."

Textron has not set a date for the completion of its management review.

FMI: www.textron.com

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