Harris Corp has revealed that it will sell its underperforming broadcast communications unit as well as its cyber integrated solutions operations following a strategic review into the company’s business portfolio.
In Harris’ third quarter 2012…
Harris Corp has revealed that it will sell its underperforming broadcast communications unit as well as its cyber integrated solutions operations following a strategic review into the company’s business portfolio.
In Harris’ third quarter 2012 results conference call, Harris president and CEO William Brown said: “We announced in the third quarter that we are exiting the underutilised cyber hosting facility and the process to divest the assets is progressing quickly. Our business portfolio review is well underway and today (1May) we are announcing the decision to divest broadcast communications which we believe is no longer aligned with the company’s long-term strategy.
“The combination of a lack of effective integration by the company over the last decade coupled with a market outlook that is not as promising today as once believed led us to conclude that the business is best owned by another party.”
On this point, Brown added: “It has been an active discussion with our board over the last six months, asking is it a fit? How do we make it better? What is the timing if we decide to exit? All those topics tend to come up quite a bit and we had a long conversation about that. In our view, given the tough environment that we our facing, we think it is important for us to focus our resources, including our management time and attention, on the businesses that we know to be core to our company so we can be successful into FY2013 and beyond.”
As for what Harris would do with the proceeds from a sale, Brown said: “Assuming that a transaction takes place at the end of this calendar year, so mid our fiscal year, the US$200m or whatever the proceeds happen to be will be used for share buybacks in the third quarter of next year.”
Following a company-wide reorganisation in April 2011, both units are part of Harris’ integrated network solutions division, which also houses satcom services provider CapRock Communications that Harris acquired back in mid-2010.
Third quarter 2012 revenue for the integrated network solutions segment was US$500m, a year-on-year increase of 8%. However, while Harris CapRock and healthcare solutions reported strong growth, with revenues for the former up 14%, this was offset by declining revenue in the company’s IT services and broadcast communications businesses. Indeed, as a result of a non-cash charge related to broadcast communications, the operating loss for the segment was US$406m.