Harris Broadcast Revenue and Income Rise in Q2 2012, Says It’s Laser Focused on Maximizing Shareholder Value

Posted by Joe Zaller
Feb 06 2012

Harris Corporation reported results for the second quarter of its 2012 fiscal year.  Total revenue for the quarter was $1.45Bn, slightly lower than last year.  Net income in the quarter dropped 12% to $131m.

The company did not disclose specific revenue details for its broadcast division, which was folded into the Integrated Network Solutions (INS) unit last year when Harris strategically realigned its business segments.  INS revenue was 4% lower on an organic basis due to an $8m loss in Cyber Integrated Solutions and Healthcare Solutions.

The Harris broadcast business appears to have performed well during the quarter.

On the company’s conference call with equity analysts, new Harris Corp CEO William Brown said that the performance was improving in the broadcast division, with revenue and operating income both up year-over-year   The company has been able to largely mitigate the impact of the flooding in Thailand to approximately $5 million of revenue and $2.5 million of profit, which are now expected to book in Q3.

However, despite its improving performance Brown indicated that the company’s broadcast business still has work to do.  “In Broadcast, we bought several companies over the years which were never fully integrated. While we continue to see good traction on the top line, our cost structure, driven by complexity, lack of productivity and growth investments, isn’t where we need it to be and it’s preventing us from achieving acceptable returns. Our team is now laser-focused on developing a strategy for this business that maximizes shareholder value.”

This comment led Cowen & Company research analyst Gautam Khanna to ask Brown whether Harris might be open to “maximizing shareholder value” in the broadcast sector, if this space does not align well with the company’s 3-5 year strategy.

Brown responded by saying that Harris is “taking a fresh look in the environment that we’re in across all of our businesses with a special focus on cash, on cost, some of the structural cost. Some of the structural cost reductions will come through some investment, which we’ll know over the coming months. We’ll give you some insights as we go through the quarter if there’s anything that’s notable that needs to be released, or at our third quarter call later in the year. But to comment on what’s in or out of the portfolio, we’re taking a fresh look at all the pieces, and that includes all the business that we happen to be in today.”

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Related Content:

Press Release: Harris Corporation Reports Fiscal 2012 Second Quarter Results

Harris Corporation Q2 FY 2012 Conference Call Transcript

Harris Fiscal 2012 Second Quarter Earnings Call Presentation

Previous Quarter: Harris Reports Q1 2012 Results, Says Broadcast Revenue Increasing

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