ELECTRONICS: Man with a Plan

Even in the electronics industry, chock-full of whiz kids, Charles Bates Thornton stands out as a wonder. He was an Air Force colonel at 28, the planning director of Ford Motor Co. at 32, the operating boss of Hughes Aircraft at 35. Now—at 45—he heads one of the fastest-growing electronics makers: Beverly Hills’ Litton Industries. In five years under Thornton, Litton’s yearly sales have risen from $3,000,000 to $83 million, are expected to top $110 million in the twelve months ending next July. Last week “Tex” Thornton was ready to bite off another chunk of the market. He said that Litton had closed a deal—pending the Justice Department’s expected approval—to buy Westrex Corp. (yearly sales: $13 million), a communications firm, with outlets in 35 foreign countries, that the trustbusters forced Western Electric to sell.

Litton products have already gone far round the free world. In Turkey, a probing Litton radar antenna reportedly keeps tabs on Soviet missile firings. Across the far north of Canada and Alaska, Litton klystron tubes generate radar beams for the Distant Early Warning line. At almost every sizable U.S. airport, Litton antennas help control flights; in universities, Litton digital desk computers solve calculus jawbreakers. Litton claims to be the nation’s biggest seller of desk calculating machines, the broadest supplier of TV replacement transformers (more than 900 different models), one of the two largest makers (along with American Bosch Arma) of inertial guidance systems for missiles.

Battle for Funds. Stocky, handsome Tex Thornton, who was born in Knox County, Texas and graduated from Texas Technological College (’37), got a backhanded boost toward success from eccentric, erratic Howard Hughes. Thornton quit Hughes Aircraft in the same big blowup of Hughesmen (TIME, Oct. 5, 1953) that sent Simon Ramo and Dean Wooldridge off to start their own famed Ramo-Wooldridge Corp. With Thornton went Roy L. Ash, Hughes Aircraft’s assistant controller and now Litton’s No. 2 man.

Looking for an angel to back them in starting a new company, Thornton went to Wall Street’s Lehman Bros. Lehman

Partner Paul Mazur argued that Thornton was just another eggheaded visionary, said that any loan to him would go down the drain. But other Lehman partners, impressed by Thornton’s job at Hughes, raised $1,500,000 in an unusual financing deal. Each investor was required to buy at least $29,200 in bonds and stocks. Each $29,200 package is now worth $522,760, and Mazur happily admits: “I was wrong. Thornton delivered far better than he talked.”

Battle for Brains. With Lehman-raised cash, Thornton and associates bought Litton, then a small microwave-tube outfit that had supplied Hughes with its best magnetrons, i.e., vacuum tubes that emit radar impulses. During the next 15 months, Litton used stock and cash to pick up half a dozen little-known firms making computers, printed circuits, servomechanisms, communications and navigation equipment. When Litton bought Digital Controls Systems Inc. in 1954, it also got brilliant Research Scientist George Steele; Steele heads Litton’s work on lightweight computers that make up to 15,000 calculations per second for a plane in flight. Litton also lured other top brains away from big companies by granting stock options. Dr. Henry Singleton left North American Aviation for Litton, where in three years he produced the answer to one of the Pentagon’s toughest problems: an inertial guidance system that is light enough (50 lbs. v. 500 to 1,000 Ibs. for earlier systems) to steer the most sophisticated missiles.

Battle for Survival. So fast did Thornton collect companies that many a competitor called Litton a house of cards, figured it would collapse under the blow of the recession. Yet Litton kept right on expanding. Early this year Litton merged with New Jersey’s Monroe Calculating Machine Co. (sales: $40 million) because

Thornton figures that Litton’s talents fit in perfectly with the electronic changes that are revolutionizing the business-machine field.

In carrying out a master plan for a balanced company, Litton now has a healthy sales split of 45% military, 55% commercial. Yet Thornton, is the first to admit that “we have a long way to go”—and that the road ahead will be slippery. Though Litton’s profits reached $3,700,000 in the last fiscal year, they have yet to live up to the price of his highly touted, fast-rising stock, now selling at 56^—or 26 times earnings. The competition in the industry is growing so rough that competitors still question whether Litton is strong enough to compete over the long run. Tex Thornton himself expects that many a promising, new electronics maker will be shaken out of the industry. Says he: “The same thing will happen in the relatively new electronics-based industry as in autos and aircraft. All industries have gone through a maturing phase, and a few companies emerge to stabilize the industry. In five years or so, a few dominant companies will emerge from electronics. Litton is going to be one of them.”