Corporations: An Appetite for the Future

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A Package of Wealth. Roy Ash, whom Thornton had lured to Hughes from a post as top statistician at the Bank of America, and Hughes Engineer Hugh W. Jamieson agreed to join Thornton in his new venture. Thornton at one point approached Joe Kennedy about the project, but finally turned for capital to Lehman Bros., Wall Street's prestigious investment house. "I told them," he says, "that I wanted to start a company that would become a strong blue chip in the scientific and technological environment of the future. It would be a balanced company—not just engineering, not just manufacturing, not just financial. You can't win a ball game with only a pitcher and a catcher, and you can't have a strong company unless it's balanced."

Thornton wound up his sales pitch by brashly outlining how he would achieve $100 million in sales in five years. The Lehman partners gasped; his ideas were good, but the sales projec tion made him sound like a windy promoter. Nonetheless, they agreed to back a $1,500,000 financing to be raised by selling investors a package of stocks and bonds worth $29,200 each. Thornton made his sales boast good in only three years—and each package is now worth $3,200,000. Any prescient investor who put $1,000 into Litton at the start would have an investment worth $85,000 today. Coming full circle, Thornton earlier this year was elected a member of Lehman's board of directors.

Buying Time. To get a base to build on, Thornton, Ash and Jamieson had selected a microwave-tube company (annual sales: $3,000,000) bearing the name of its engineer-owner, Charles Litton. Litton suspiciously refused to take stock in the new company, instead demanded $1,000,000 in cash; the stock, of course, would now be worth $85 million. With stock, cash, credit and persuasive argument, Thornton and his friends began buying up a series of little-known outfits that made printed circuits, computers, servomechanisms, communications and navigation equipment. Thornton felt that Litton had to grow big and muscular in a hurry to survive the jolt of changing technology —but he had a reason behind every move. "We have never acquired companies as such," he says. "We have bought time, a market, a product line, a plant, a research team, a sales force. It would take us years to duplicate all this from scratch."

Litton's biggest acquisition came in 1958, when it took over Monroe Calculating Machine (sales: $40 million a year) after a fervent courtship of many months. The business-machine field was changing rapidly, but Litton needed a well-known name and ready facilities to take advantage of the change. To tie in with Monroe, it then picked up a succession of outfits: a Swedish cashregister maker, a maker of tickets and labels, a company that now prints more trading stamps than the U.S. Government does postage stamps. When Ingalls

Shipbuilding Corp. of Pascagoula, Miss., was first offered for sale in 1961, Thornton was totally uninterested. But he brooded over the possibilities for weeks, finally concluded that the nuclear submarines that Ingalls was building were really just a collection of electronic machines and devices packed into a hull, and therefore an excellent destination for the products of Litton's expanding electronics complex. He bought Ingalls.