Defense Firm SAIC Might Go Public

San Diego-based Science Applications International Corp., an employee-owned firm that ranks as one of the nation’s biggest defense contractors, is exploring going public.

In a memo sent to SAIC’s 42,000 employees Monday, Chief Executive Ken Dahlberg said the board and senior management were considering several options to raise money for possible acquisitions, including taking on additional debt, an initial public offering or a limited stock placement to private investors.

The board expects to choose an option in the next few months.

Since its founding in 1969, SAIC has grown into the eighth-largest defense contractor, with $2.5 billion in prime contract awards in fiscal 2004, according to the Defense Department.

The company reported $7.2 billion in revenue last year.

Driving the need for capital is SAIC’s plans to grow by acquiring rivals -- a strategy that senior executives say has been hamstrung by employee ownership.

SAIC announced its plans as it posted fiscal first-quarter results.

Net income in the three months ended April 30 was $585 million, thanks to a one-time gain from the sale of its Telcordia Technologies subsidiary.

Excluding that, earnings would have been $55 million, down from $67 million in the same period a year ago. Revenue rose 8% to $1.85 billion from $1.71 billion.