Posts Tagged ‘William Brown’

Harris Corp Completes Sale of Broadcast Business to The Gores Group

Broadcast Vendor M&A, SEC Filings | Posted by Joe Zaller
Feb 04 2013

Harris Corporation has completed the sale of its Broadcast Communications Division (Harris BCD) to The Gores Group, a Los Angeles based private equity firm.

Contractual details of the Asset Sale Agreement between Harris and The Gores Group can be viewed here.

The completion of the deal means that Harris Corp is now officially out of the broadcast business, after 50+ year run as one of the broadcast industry’s most significant technology vendors.  However, it appears that, for now at least, BCD will continue to be called Harris Broadcast.

Harris Morris, CEO of Harris Broadcast said “This is an exciting new chapter for Harris Broadcast, our employees and our customers. The Gores Group is an ideal fit to help us move the business forward and help drive innovation, streamline operations and improve customer service. They will also provide us additional resources such as a flexible capital base and introduce new talent to the Company.”

Carl Vogel, a veteran of the cable television and satellite industry, is a senior advisor to The Gores Group and will be a member of the Gores team providing advice and strategic guidance to the Company.

Ryan Wald, Managing Director of The Gores Group added, “We anticipate great things from Harris Broadcast. The Company has proven technology, great products and an outstanding team. With our equity capital and guidance we are confident that Harris Broadcast will transition to a strong independent company that will continue to develop and deliver market leading technology and service to its customers.”

The headline valuation of the deal was $225m, comprised of “$160m in cash, a $15m subordinated promissory note and an earnout of up to $50m based on future performance.”  According to a Harris 8-K filing with the SEC, the terms of the earnout state that in each of the four calendar years from 2013 through 2016, Harris Corporation will receive a contingent payment (in cash) of twenty percent of the revenue of Harris BCD that is in excess of a specified target revenue amount. The target revenue amount required to trigger the contingency payment to Harris Corporation was not specified, so it is difficult to judge how likely it is that the payment will be triggered. This contingent payment amount is subject to an annual cap of $25m in each calendar year (2013 – 2016).

The price paid by Gores for BCD is lower than what Harris executives previously indicated they hoped to achieve.  As a result, Harris Corp recently recorded a non-cash impairment charge of $98m relating to the sale of BCD. This is fourth time the company has written down the value of BCD during the sale process.

Following the most recent write-down of BCD’s book value, the company was contacted by SEC staff regarding the timing of the impairment charges relating to BCD. According to a filing with securities regulators, Harris provided the SEC with the following explanation:

“As of our June 29, 2012 year-end, we wrote down the carrying value of Broadcast Communications (“BCD”) to $461 million, which represented the lower of carrying value ($461 million) or estimated fair value of $490 million less estimated costs to sell of $26.5 million (or $463.5 million). With the assistance of a third-party valuation consultant, we estimated the fair value at that time to be $490 million based on discounted cash flow analysis and an analysis of sale transactions and public company market multiples for companies in markets similar to BCD. This analysis yielded estimated fair values ranging from $487 to $496 million, and included assumptions that reflected expected conditions in the markets BCD operates in. Our analysis was corroborated by a valuation summary prepared by the investment banker we engaged to assist with the sale of BCD and preliminary indications of value from potential purchasers of BCD which we received in early August 2012. Accordingly, we believe the net assets of BCD were appropriately valued at June 29, 2012.

“Unexpected changes in facts and circumstances caused us to conclude impairment indicators were present relative to BCD at the conclusion of our first fiscal quarter ended September 28, 2012. As a result of weaker than expected market conditions and general uncertainty in the market surrounding the BCD sale process, BCD unexpectedly reported lower than forecasted revenue, operating income and cash flows for the first quarter of fiscal 2013. BCD’s lower first quarter results and a lower confidence level in BCD’s ability to meet future financial forecasts resulted in lower preliminary bids from interested parties received during the last week of October ranging from $175 to $310 million. Further, we updated our discounted cash flow analysis as of September 28, 2012 by adjusting our assumptions of expected revenues, operating income and cash flows. Specifically, we reduced our revenue projections, increased projected working capital requirements and applied higher discount rates to reflect greater uncertainty surrounding BCD’s current and future expected financial results. As a result of the lower preliminary bids, our updated discounted cash flow analysis and a revised valuation summary prepared by our investment banker, we reduced the carrying value of BCD as of September 28, 2012 to $287.2 million (estimated fair value of $300 million, less estimated selling costs of $12.8 million), resulting in a non-cash impairment charge of $216.5 million.”

 

Recent Performance of Harris BCD

According to a recent 10-Q filing with the SEC, Harris said its discontinued operations, the vast majority of which relate to BCD performed as follows:

 

 Results of Harris Discontinued Operations Through Fiscal Q2 2013

 

Looking to the Future of Harris Broadcast

Now under new ownership, Harris Broadcast remains one of the largest vendors in the broadcast technology space.  The completion of deal means the company can now put behind it the uncertainty that has surrounded it since Harris Corp announced its intention to divest the business. As an independent company Harris Broadcast can now focus entirely on its core business and execute its strategy for growth and profitability.  It will be interesting to watch the actions the company takes between now and the 2013 NAB Show, which will be the first major public appearance of the new company.

 

 

Related Content:

Harris Corp Press Release: Harris Corporation Completes Sale of its Broadcast Communications Business to The Gores Group

Gores Group Press Release: The Gores Group Completes Acquisition of Harris Broadcast Communications

Harris Corp 10-Q Filing for the Quarterly Period Ended December 28, 2012

ASSET SALE AGREEMENT by and between HARRIS CORPORATION and GORES BROADCAST SOLUTIONS, INC. Dated as of December 5, 2012

Harris Corporation — Correspondence with SEC Regarding Write-Down of the Value of Harris BCD

Harris Corp Reports Q2 2013 Earnings, Writes Down Value of Broadcast Business by Additional $98 Million, Expects BCD Sale to Close in February

Harris Corporation Discloses Structure of Promissory Note and Earnout Provision in Sale of Broadcast Communications Division

Harris Corporation to Sell Broadcast Business to The Gores Group for $225 Million

Harris Corp Announces Q1 FY 2013 Results, Further Writes Down Value of Broadcast Business

Harris Corporation To Divest Broadcast Business

Analyzing the Sale of the Harris Broadcast Division

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Harris Corp Reports Q2 2013 Earnings, Writes Down Value of Broadcast Business by Additional $98 Million, Expects BCD Sale to Close in February

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Jan 29 2013

Against a backdrop of what CEO William Brown called a “very difficult and uncertain government spending environment,” Harris Corporation announced that its revenue in the second quarter of fiscal 2013 was $1.29Bn compared with $1.31Bn during the same period a year ago.

GAAP income from continuing operations was $142m, or $1.25 per diluted share, compared with $136m, or $1.18 per diluted share.

Harris had little to say about its Broadcast Communications Division (BCD) other than the fact that it has “entered into a definitive asset sale agreement with Gores Broadcast Solutions, Inc., an affiliate of The Gores Group, LLC, relating to the sale of Broadcast Communications.”

The company also disclosed that it recorded a non-cash impairment charge of $98m relating to the sale of BCD.

Harris has written down the value of BCD on three previous occasions. The most recent write-down was in October 2012 when the company said that based on “recent indicators of value during the first quarter of fiscal 2013, including market, financial performance and indications of value from interested parties,” it had recorded non-cash impairment charges in discontinued operations totaling $222m. Harris said that the “vast majority” of this write-down was related to BCD, with only about $6m attributed to the company’s Cyber Integrated Solutions business, which was also discontinued in 2012.

At that time, Brown said that as a result of this charge, Harris had put a net book value of $287m on Harris BCD, which he said provided an “indication of the value we expect to receive” from the sale of the broadcast business.

When Harris announced the deal to sell its broadcast business to PE firm the Gores Group in December 2012, the company put a headline value of $225m on the transaction, or $62m lower than the value Brown had telegraphed to the market two months earlier.

However, through the BCD sale press release and a subsequent regulatory filing with the SEC, Harris disclosed that the terms of its deal with the Gores Group was made up of “a cash payment of $160m, a $15m subordinated promissory note (payable 15 months after closing), and an earnout of up to $50m based on future performance.”

Today’s disclosure that Harris has recorded an additional $98m impairment charge against the value of BCD, means the broadcast business is now valued on its books at $189m. This implies that after receiving the $160m cash payment, and the payment of the $15m promissory note ($16.125m with interest), Harris is not being overly optimistic that it will receive the full potential value of the earnout provision.

Nevertheless, Harris CFO Gary McArthur told analysts that the company “continues[s] to plan to purchase an additional $200 million in shares upon the successful conclusion of the broadcast sale,” something that both McArthur and Brown have reiterated since announcing the intent to divest BCD in May 2012.

McArthur also said that the company expects to close the sale of BCD in early February 2013, thereby ending the company’s 50+ year run as one of the broadcast industry’s most significant technology vendors.

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Related Content:

Press Release: Harris Corporation Reports Fiscal 2013 Second Quarter Results

Harris Corporation Discloses Structure of Promissory Note and Earnout Provision in Sale of Broadcast Communications Division

Harris Corporation to Sell Broadcast Business to The Gores Group for $225 Million

Harris Corp Announces Q1 FY 2013 Results, Further Writes Down Value of Broadcast Business

Harris Corporation To Divest Broadcast Business

Analyzing the Sale of the Harris Broadcast Division

Harris Corporation Shuts Down Cyber Integrated Solutions Business

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Harris Corporation to Sell Broadcast Business to The Gores Group for $225 Million

Broadcast Vendor M&A | Posted by Joe Zaller
Dec 06 2012

Harris Corporation said today that it has signed an agreement to sell its Broadcast Communications Division (Harris BCD) to The Gores Group (TGG), a Los Angeles-based private equity firm, for $225m.

Under the terms of the deal, The Gores Group will pay $160m in cash a $15m subordinated promissory note and an earnout of up to $50m based on future performance. The deal is expected to close in early calendar year 2013.

The deal price is  below the $287m valuation that Harris Corp recently said it had on its books for BCD following three successive write-downs of BCD.

“The sale of Broadcast Communications reflects our strategy to optimize our business portfolio and focus on our core businesses,” said Harris Corporation CEO William Brown.

The upfront cash portion of the deal is below the amount that Brown had previously telegraphed to the market.  When the sale of BCD was announced in May 2012, Brown said that he expected to receive “substantially more” than $200m for BCD, and that the company would the first $200m from the sale of BCD to shareholders, and use the residual to invest in the company’s core defense business.

Brown addressed this in a statement, saying “As previously communicated, we plan to repurchase up to $200 million of our shares after the deal closes. This is in addition to the $200 million of share repurchases already planned for fiscal 2013 and reflects our ongoing commitment to effectively deploy capital, including returning cash to shareholders.”

According to its website, The Gores Group has $3.3 billion in assets under management and “specializes in acquiring businesses that are undergoing change in capital structure, strategy, operations or growth and can benefit from Gores’ operational and strategic approach.” TGG says it “targets companies with a defensible core business, mature products or services, sustainable revenues, established customer relationships, and that have reached a transition point in their lifecycle presenting an opportunity for transformation.”

“In Harris Broadcast Communications, we are investing in a proven technology leader with great products and a great team. We are excited to provide the capital and support to transition this division to a strong and independent company further enabling it to continue developing and delivering market leading technologies to its customers,” said Ryan Wald, Managing Director of The Gores Group.

The announcement did not disclose whether current management would remain in place, or for how long Harris BCD will continue to have the right to use the Harris name.  However Wald’s statement that TGG is investing in a great team implies current Harris BCD president Harris Morris is likely to remain at the helm of the company.

The announcement comes after months of intense rumor and speculation, which began in May 2012 when Harris Corporation announced its intention to divest its broadcast business, saying BCD was no longer considered a core asset to the defense contractor’s overall business.

At that time, Harris Corporation CEO William Brown summed up the company’s reasons for wanting to sell-off BCD: “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 believe that the business is best owned by another party.

The structure of Harris BCD today is the result of a decade-long M&A program, which transformed the company from a leading provider of radio and television transmitters into one of the largest pure-play broadcast technology vendors. According to a TVNewsCheck article, Harris spent close to $1 Billion on M&A since 2000, including the acquisitions of Louth, Encoda, and Leitch.

A May 2012 analysis of the sale of the Harris broadcast business showed that the company has approximately 1,700 employees and had revenue of approximately $375m through the third quarter of FY 2012, essentially flat with the previous year.  It is believed that Harris BCD had revenue of approximately $500m for the full FY 2012, which ended on June 30, 2012, down about 10% versus the previous year.

 

Deal Valuation Below Book Value

The $225m valuation of BCD is below Harris Corp’s internal valuation of BCD, which the company said during its most recent earnings announcement that it had lowered to approximately $287m based on “recent indicators of value during the first quarter of fiscal 2013, including market, financial performance and indications of value from interested parties.”

At that time, Brown said this lowered internal valuation gives an “indication of the value we expect to receive” from the sale of Harris BCD.

The recent write-down of BCD is the third time in the last six months that Harris has taken a non-cash impairment charge against the value of BCD.

In May 2012 when Harris Corp announced its intention to divest BCD, the company said it “recorded in the third quarter a non-cash charge of $407m after-tax, or $3.62 per diluted share, to write down a significant portion of the goodwill and other long-lived assets in Broadcast Communications, resulting in the GAAP loss from continuing operations.”  Information about how Harris Corp calculated this write-down was published in the company’s Q3 FY 2012 10-Q filing.

Harris subsequently disclosed a second BCD impairment charge of $23.6m in August 2012 as part of the company’s annual 10-K filing with the SEC, which said:

 “Due to the length of time necessary to measure the impairment of goodwill and other long-lived assets, our impairment analysis [of BCD] was not complete as of the end of the third quarter of fiscal 2012. In the fourth quarter of fiscal 2012, we completed our impairment analysis and, as a result, recorded a $23.6 million ($10.5 million after-tax) increase to our initial estimated impairment charge. The portion of the total $447.6 million impairment charge related to goodwill was $395.6 million, a minor amount of which was deductible for tax purposes.”

 

Potential Implications of the Deal for the Broadcast Industry

The fact that Harris BCD was acquired by a private equity firm with no previous experience in the broadcast technology space has interesting implications for both Harris BCD and the broadcast technology landscape as a whole.

Since Harris Corp announced its intention to sell the broadcast unit, many names have been bandied about as potential buyers of BCD — ranging from established industry players such as Grass Valley (via their PE owner Francisco Partners), to large “strategic buyers” with some existing activities in the broadcast industry (similar to Belden’s purchase of Miranda Technologies earlier this year), to private equity players.

Now that the buyer has been announced, the next question is whether The Gores Group will use BCD as a platform for further expansion into the broadcast industry (as Belden said it would do with Miranda), or break BCD up and sell it off.

Time will tell.

 

What’s Next For Harris Corp?

Having found a buyer for BCD, Harris Corporation can now concentrate on its core defense business.  This was one of the primary factors cited by Brown when he announced the plan to sell BCD in May 2012, saying to equity analysts: “given the tough environment that we are facing it’s 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 FY 2013 and beyond.”

However, things are getting tougher in the defense business due in large part to hundreds of millions of dollars in mandatory budget that are scheduled to take effect in early 2013. This has put pressure on Harris Corp.  According to a recent Associated Press article Lazard Capital Markets analyst Michael Lewis downgraded his rating on the company’s stock, citing worries about weaker revenue due to reduced government spending.

This may make Harris Corp a potential takeover target.  Indeed, according to a recent Reuters article, the collapse of the proposed $45 Billion merger of defense giants BAE and EADS “will shift the focus to smaller deals among global weapons makers as companies strive to keep revenue rising in the face of cuts in military spending by the United States and Europe.  Instead, major defense companies likely will focus on possible combinations with smaller players such as Rockwell Collins, L-3 Communications Holdings Inc, SAIC Inc, ITT Exelis and Harris Corp, according to interviews with more than a dozen industry executives and bankers.”

Given the environment, one has to wonder whether the divestiture of BCD is a precursor of an eventual sale of Harris Corporation itself to a larger defense contractor. After all, both the company and its CEO may now be well-positioned for the next deal.

With the pending disposal of BCD now announced, Harris Corp is now a pure-play “mid-tier” defense contractor, and therefore more attractive as a potential partner to another defense firm; and Brown himself is well-suited for this environment.  He joined Harris from United Technologies (UTC), where he orchestrated a $16.5 billion deal to buy Goodrich Corp., which closed after he joined Harris as CEO.  Previously, as the head of UTC’s Fire & Security division, he executed more than 40 M&A deals, creating a $6.5 Billion operation in the process.

 

 

 

 

 

Related Content:

 

Press Release: Harris Corporation to Sell Broadcast Communications to The Gores Group for $225 Million

Harris Corp Announces Q1 FY 2013 Results, Further Writes Down Value of Broadcast Business

Harris Corporation To Divest Broadcast Business

Analyzing the Sale of the Harris Broadcast Division

Guest Post: Investment Banker Perspective on Sale of Harris Broadcast

Statement From Harris Broadcast CEO on Divestiture of Harris Broadcast Communications Division

Harris Q3 FY 2012 10-Q Filing – details write-down of broadcast division

Harris 8-K Filing – Restates Fiscal 2011-12 Revenue on Pro Forma Basis (Without Broadcast and Cyber Integrated Solutions)

TVNewsCheck Article: Tech’s Big Question: What’s Next For Harris?

Quincy Herald-Whig ArticleProspective buyers seek information on Harris broadcast; business as usual in Quincy

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Harris Corp Announces Q1 FY 2013 Results, Further Writes Down Value of Broadcast Business

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Oct 30 2012

Harris Corporation announced that its revenue in the first quarter of its 2013 fiscal year was $1.26Bn, down 6% versus the same period a year ago, and down 13% versus the previous quarter.

These results do not include the company’s Broadcast Communications Division (BCD) which was classified as a discontinued operation following the May 2012 announcement that Harris will divest its broadcast division, which is no longer considered a core asset to the defense contractor’s overall business. Harris Cyber Integrated Solutions (CIS), which the company said it was shutting down in February 2012 was also excluded from these results.

 

Performance of Broadcast Business Below Expectations

Although the company did not break out the results of its broadcast division, the performance of BCD in the quarter was “little bit worse than expected,” according to statements made by Harris CEO William Brown during a conference call with equity analysts.   “Our first quarter results in Broadcast were a little less than what we had expected, both because the market’s a little bit tough and because some of the issues around our selling the business [caused] some of our customers to be a bit hesitant,” said Brown.

Based on an analysis of recent Harris Corp SEC filings, it is believed that Harris BCD had revenues of approximately $135m during the first quarter of fiscal 2012, and more than $500m for the full 2012 fiscal year.

 

Update on Sale of Harris Broadcast Communications Division

Harris CFO Gary McArthur said the company is making progress on the disposal of BCD and it expects “to conclude by the end of the calendar year.”  This timetable is consistent with the company’s previous earnings call, and also with statements made by Harris BCD president Harris Morris at the company’s press conference at the recent IBC trade show.

McArthur also reiterated the company’s previously stated intention to “use up to $200m of the proceeds from the BCD disposition to repurchase additional shares” of Harris Corp.

 

Further Write-Down of Harris Broadcast Communications Division Valuation

Harris also announced that it has recorded additional non-cash impairment charges in discontinued operations totaling $222 million, the “vast majority” of which is related to BCD, with only about $6m attributed to CIS.

The company said it lowered the internal valuation of CIS and BCD based on “recent indicators of value during the first quarter of fiscal 2013, including market, financial performance and indications of value from interested parties.”

Brown said that as a result of these factors, Harris has puts a net book value of $287m on the company’s broadcast communications business, which he said gives an “indication of the value we expect to receive” from the sale of Harris BCD.

This is the third time in the last six months that Harris has taken a non-cash impairment charge against the value of BCD.

In May 2012 when Harris Corp announced its intention to divest BCD, the company said it “recorded in the third quarter a non-cash charge of $407m after-tax, or $3.62 per diluted share, to write down a significant portion of the goodwill and other long-lived assets in Broadcast Communications, resulting in the GAAP loss from continuing operations.”  Information about how Harris Corp calculated this write-down was published in the company’s Q3 FY 2012 10-Q filing.

Harris subsequently disclosed a second BCD impairment charge of $23.6m in August 2012 as part of the company’s annual 10-K filing with the SEC, which said:

 “Due to the length of time necessary to measure the impairment of goodwill and other long-lived assets, our impairment analysis [of BCD] was not complete as of the end of the third quarter of fiscal 2012. In the fourth quarter of fiscal 2012, we completed our impairment analysis and, as a result, recorded a $23.6 million ($10.5 million after-tax) increase to our initial estimated impairment charge. The portion of the total $447.6 million impairment charge related to goodwill was $395.6 million, a minor amount of which was deductible for tax purposes.”

 

The lowered valuation of BCD prompted JP Morgan Chase analyst Joseph Nadol to ask whether there is a price at which Harris would not sell the broadcast business.  Brown rebuffed this idea, saying “we made the decision to divest the Broadcast business because we didn’t think it fits strategically with where we want to take the [core] business. It’s now our job to maximize value for share owners and as we dispose of that business and that exactly what we’re doing. I don’t think it’s appropriate to have a where’s the sort of the walk-away price. We’re committed to sell the business and do the right thing for share owners, given the fact it doesn’t fit strategically and that’s what the management team has got a bead on right now. So we’ll tell more, we’ll have more of an update towards the end of the year as we announce the sale of Broadcast and clearly more to say as we announce our Q2 results.”

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Related Content:

Press Release: Harris Corporation Reports Fiscal 2013 First Quarter Results

Harris Corp. Fiscal 2013 First Quarter Earnings Call Presentation

Harris shares fall after Lazard downgrade http://dcft.co/Ra6J5m

Previous Quarter: Harris Announces Q4 and Full Year 2012 Results – Says Sale of Broadcast Business is On Track to Close by End of Year

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

Harris 10-K Filing with SEC for FY 2012

Presentation: Harris Annual Meeting of Shareholders, October 26, 2012

Guest Post: Investment Banker Perspective on Sale of Harris Broadcast

Analyzing the Sale of the Harris Broadcast Division

Statement From Harris Broadcast CEO on Divestiture of Harris Broadcast Communications Division

Harris Corporation To Divest Broadcast Business

Harris Q3 FY 2012 10-Q Filing – details write-down of broadcast division

Harris 8-K Filing – Restates Fiscal 2011-12 Revenue on Pro Forma Basis (Without Broadcast and Cyber Integrated Solutions)

TVNewsCheck Article: Tech’s Big Question: What’s Next For Harris?

Quincy Herald-Whig ArticleProspective buyers seek information on Harris broadcast; business as usual in Quincy

Harris Corporation Shuts Down Cyber Integrated Solutions Business

 

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Harris Announces Q4 and Full Year 2012 Results – Says Sale of Broadcast Business is On Track to Close by End of Year

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Aug 02 2012

Harris Corporation announced that its revenue for the fourth quarter of its fiscal 2012 was $1.44 billion compared with $1.52 billion in the prior-year quarter.

Revenue from the company’s broadcast division (BCD), which is now classified as a discontinued operation, was not disclosed. 

Harris Corporation announced its intention to divest its broadcast division in May 2012, saying that BCD was no longer considered a core asset to the defense contractor’s overall business.  An analysis of the sale of the Harris broadcast business showed that the company has approximately 1,700 employees and had revenue of approximately $375m through the third quarter of FY 2012, essentially flat with the previous year.

The only mention of the ongoing sale process sale of Harris Broadcast was on the company’s earnings conference call, when Harris CEO William Brown said the following in response to a question from JP Morgan Chase analyst Joseph Nadol “We’ve just initiated the process. We’re out in the marketplace with offering materials. The response so far has been very, very good. We expect bids in the next few weeks and we’ll expect to conclude a transaction by the end of the year as — end of the calendar year, as we’ve said last time, and we’re on track for that.”

It is believed that Harris has retained Morgan Stanley to assist with the sale of the company’s broadcast division, and that the company is holding preliminary discussions with a variety of interested parties.

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Related Content:

Press Release: Harris Corporation Reports Solid Fiscal 2012 Fourth Quarter Results

Harris Fiscal Q4 2012 Analyst Presentation

Harris Fiscal Q4 2012 Conference Call Transcript

Guest Post: Investment Banker Perspective on Sale of Harris Broadcast

Analyzing the Sale of the Harris Broadcast Division

Statement From Harris Broadcast CEO on Divestiture of Harris Broadcast Communications Division

Harris Corporation To Divest Broadcast Business

Harris Q3 FY 2012 10-Q Filing – details write-down of broadcast division

Harris 8-K Filing – Restates Fiscal 2011-12 Revenue on Pro Forma Basis (Without Broadcast and Cyber Integrated Solutions)

TVNewsCheck Article: Tech’s Big Question: What’s Next For Harris?

Quincy Herald-Whig ArticleProspective buyers seek information on Harris broadcast; business as usual in Quincy

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Analyzing the Sale of the Harris Broadcast Division

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
May 07 2012

After last week’s announcement that Harris Corporation plans to sell its broadcast business, I was contacted by a number of people who wanted more information about Harris Broadcast and the transaction.  Here’s a list of the top questions, along with some thoughts on each one

 

How Big is Harris Broadcast in Terms of Employees and Revenue?

Employees: According to this article in the Quincy Herald-Whig, the Harris Broadcast Communications Division (BCD), has 1,700 employees, including 348 employees at its Quincy Illinois facility.

Revenue: The revenue of Harris Broadcast is somewhat difficult to calculate because Harris BCD is part of Harris Corporation’s Integrated Network Solutions (INS) business unit, which was created last year when Harris Corporation strategically realigned its business segments

Until last week, the last time Harris published data about the broadcast business was more than a year ago (Q2 Fiscal 2011).  However, on the company’s recent Q3 2012 analyst conference call, Harris CFO Gary McArthur disclosed that Harris Broadcast had revenue for the third quarter of fiscal 2012 was $111m, a decline of 14% versus the same period a year ago – thereby also implying that revenue in Fiscal Q3 2011 was $126.5m (interestingly this is a different number than Harris provided last year when it said that Broadcast revenue in Q3 2011 had increased 9% versus Q3 2010, implying Q3 Fiscal 2011 revenue of $134m, but for the purposes of this article, I will stick with the implied $126.5m revenue figure for Q3 2011). Fiscal 2011 Q4 can be calculated from previous earnings announcements.

Also on the Q3 FY 2012 earnings call, Harris revised its guidance for FY 2012.  The company had previously said its revenue for Fiscal 2012 would be approximately $6 Billion. In its Q3 2012 analyst presentation (last page), Harris now says that its FY 2012 revenue excluding Broadcast and Cyber Integrated Solutions (Cyber) operations, (which was also part of the INS Division and was shut down in February 2012) will be $5.45 Billion.  This implies that the company was projecting approximately $555m in revenue from the combination of its broadcast and cyber businesses in 2012.

Harris also recently filed an 8-K with the SEC that enables one to derive more information about the broadcast business.  The 8-K filing restated the performance of Harris’s INS division on a pro-forma basis (excluding Broadcast and Cyber).  By subtracting the pro-forma numbers from previously issued results, it’s possible to approximate the revenue of Harris Broadcast in both 2011 and 2012.

Other regulatory filings show that the revenue from the Harris Cyber business was $11.7m for the first nine months of the current fiscal year.   Thus the revenue of the broadcast business can be calculated as shown below. 

 

 

 

The table above shows that in Fiscal 2011 the Harris broadcast business generated approximately $545m in revenue.  What’s interesting is the company’s huge Q4 2011 performance, which was up 31% over the same period in 2010.

It appears that for the first three quarter of the company’s fiscal 2012, Harris Broadcast revenue is approximately $375m, roughly flat with the first nine months of fiscal 2011.  This begs the question as to whether Harris Broadcast will be able to achieve Q4 FY 2012 results that are strong as their performance a year ago.

According to the article reference earlier, a Harris Broadcast spokesperson said that 56% of the division’s revenue comes from North America.

 

 

What is Harris Broadcast’s Profitability and what is the Impact of Corporate Overhead on Profit?

Given the opaque nature of the broadcast division’s financials, it’s difficult to know its profit levels. The company said that broadcast made a profit in fiscal 2011, but did not offer details.

However, it’s important to keep in mind that Harris Broadcast is part of a $6 Billion defense contractor. As such it undoubtedly has significant corporate overheads allocated to it by the parent company.  While this number is unknown, it likely runs into the millions of dollars.  If these costs are substantial, then they could impact the profitability of the division.  Under a new owner, it’s possible that Harris Broadcast will not be charged these overheads, thereby substantially increasing its underlying profitability. 

 

 

How Much Did Harris Spend The Broadcast Business Together?

For many years, Harris has been a leading provider of radio and television transmitters.  However in 2000 the company went on a buying spree that the company began to transform itself into a multi-product industry giant starting in 2000 with the acquisition of Lout Automation. According to an article in TVNewsCheck, Harris spent $942m on M&A since 2000:

  • Louth Automation in 2000, $85m
  • Encoda Systems in 2004 for $340m
  • Leitch Technologies in 2005 for $450m
  • Aastra Digital Video in 2006 for $35m
  • OSI in 2006 for $32m

 

 

Who Will Buy Harris Broadcast?

This is the number one question people are asking, and I don’t have a clue what the answer will be. 

Harris Broadcast is of a size (see above) that makes it one of the largest pure play broadcast technology vendors.  As such there are not many industry vendors large enough to be able to afford the Harris Broadcast business.  This leave several options including a “strategic” sale to a large IT or media vendor, a private equity deal which leaves the current management in place, or the spinning off of the broadcast business as a separate public company. 

If I had to bet, I would say that the PE option is the most likely, particularly if it is a cash deal.  Harris CEO William Brown implied his preference for a cash deal when he said that Harris will use the first $200m of the proceeds from the sale of the broadcast business to buy back stock, and use the residual balance to fund core activities.

Incidentally, Harris Corporation bought back approximately $800m in stock last year.

 

 

Will Harris Broadcast Be Sold as a Unit or Piecemeal?

It would be pure speculation on my part to hazard a guess at this one, but I’d be remiss if this question was not included on this list.  I am sure Harris is evaluating all the options.

 

 

How Much Will Harris Broadcast Sell For?

This depends on a huge number of factors, and I will defer to others to answer this one.

On the one hand it’s possible that Harris Broadcast sells for a healthy multiple as per the Cisco/NDS and Harmonic/Omneon deals.  On the other hand the valuation may be much lower as per the Francisco Partners / Grass Valley deal. 

One key factor is the expectation of valuation that Harris Corporation has for the broadcast business and how quickly it wants to do a deal.  Although this is not known, the company has provided a few clues in both its statements to analysts, and its regulatory filings.

As stated above on the company’s recent earnings call, Brown said he expects a transaction to occur by the end of calendar 2012.  He went on to say that the first $200m from the sale of the broadcast business would be used to buy back Harris stock.  However, he went on to say that he “fully expects that the proceeds [from the sale of the broadcast business] will be substantially higher than $200m”, although he declined to speculate on a valuation or even a value range.

The company also said it “recorded in the third quarter a non-cash charge of $407m after-tax, or $3.62 per diluted share, to write down a significant portion of the goodwill and other long-lived assets in Broadcast Communications, resulting in the GAAP loss from continuing operations.

In its Q3 FY 2012 10-Q filing with the SEC, Harris Corporation provided useful information about how it calculated the $407m charge, and how it is internally valuing the broadcast business.

The following information is excerpted from the 10-Q:

“Goodwill and other long-lived assets held and used related to Broadcast Communications with a carrying amount of $800.0 million were written down to their preliminary estimate of fair value of $376.0 million, resulting in a preliminary estimate of $424.0 million for a non-cash impairment charge, which was included in income (loss) from continuing operations for the quarter and three quarters ended March 30, 2012. See Note N — Impairment of Goodwill and Other Long-Lived Assets in these Notes for additional information.

 

“Note N — Impairment of Goodwill and Other Long-Lived Assets

“We test our goodwill and other indefinite-lived intangible assets for impairment annually, or under certain circumstances, more frequently, such as when events or circumstances indicate there may be impairment. Indications of potential impairment of goodwill related to Broadcast Communications (which is part of our Integrated Network Solutions segment) were present at the end of the third quarter of fiscal 2012 resulting from the following circumstances and other factors: (i) an unanticipated revenue decline and operating loss for Broadcast Communications for the third quarter of fiscal 2012 (as a result of weaker demand in North America and longer international sales lead times), which also resulted in a decrease in the fiscal 2012 outlook for Broadcast Communications and (ii) depressed indicators of value resulting from analyses undertaken in the third quarter of fiscal 2012 in connection with the review of our business portfolio, including the evaluation of strategic alternatives for Broadcast Communications that included a potential divestiture of Broadcast Communications and the principal markets currently available. Consequently, in connection with the preparation and review of our financial statements for the third quarter of fiscal 2012, we performed an interim review of Broadcast Communications’ goodwill for impairment as of the end of the third quarter of fiscal 2012. See Note R — Subsequent Event in these Notes for details regarding the approval by our Board of Directors on April 27, 2012 of a plan to divest Broadcast Communications.

“To test for potential impairment of goodwill related to Broadcast Communications, we prepared a preliminary estimate of the fair value of the reporting unit based on a combination of projected discounted cash flows and principal market-based multiples applied to sales and earnings. The current carrying value of the Broadcast Communications reporting unit exceeded its estimated fair value, and accordingly, we preliminarily allocated the estimated fair value to the assets and liabilities of the Broadcast Communications reporting unit to estimate the implied fair value of goodwill.

“In conjunction with the above-described impairment review, we also conducted a review for impairment of other long-lived assets related to Broadcast Communications, including amortizable intangible assets, fixed assets and capitalized software, and impairment of these assets was considered prior to the conclusion of the goodwill impairment review. The estimated fair value of other long-lived assets related to Broadcast Communications was determined based, in part, on an analysis of projected cash flows.

“As a result of these impairment reviews, we concluded that goodwill and other long-lived assets related to Broadcast Communications were impaired as of the end of the third quarter of fiscal 2012 and we recorded an estimated non-cash impairment charge of $424.0 million ($406.5 million after-tax). Due to the length of time necessary to measure the impairment of goodwill and other long-lived assets, our impairment analysis is not complete and is subject to change. We expect to complete our analysis prior to reporting our financial results for the fourth quarter of fiscal 2012 and will record any adjustments to our preliminary estimate at that time. The portion of the estimated impairment charge related to goodwill was $379.0 million and is not deductible for tax purposes. The tax effect of that non-deductibility was treated as a discrete item in the third quarter of fiscal 2012 for purposes of calculating our effective tax rate. We do not expect to make any current or future cash expenditures as a result of the impairment. The estimated impairment does not impact covenant compliance under our credit arrangements, and we do not expect the impairment to impact our ongoing financial performance, although no assurance can be given.”

 

 

Timing – Why Now?

On the company’s conference call with equity analysts, Brown was asked why the broadcast business is being sold now.  Brown said that the divestment of the broadcast business was “Not a new topic with our board, it has been discussed quite frequently over the last several years given where broadcast happens to be… it’s been an active discussion with our board on is it a fit, how do we make it better, what is the timing if we decide to exit… we had a long conversation about it… in our view, given the tough environment that we are facing it’s 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 FY 2013 and beyond.”

One reason could be Brown himself, who became president & CEO of Harris Corporation in late 2011.   

The current broadcast business was put together under the watch of former CEO Howard Lance who retired last year.  Lance was supportive of the broadcast business so while he was at the helm of Harris Corporation, the structure was unlikely to change.

Brown joined Harris from United Technologies where he was responsible for the company’s global strategic planning and M&A activity.  He’s a deal-maker who has not wasted any time divesting of “non-core” assets, starting with the Cyber Integrated Solutions business, and now broadcast. 

Now that Brown has set up Harris to be more focused on its core defense business, one has to wonder whether he will continue to run the Harris as a defense company, or try to engineer a larger deal that would see Harris Corporation itself sold to a larger defense contractor.

 

 

What Happens to FAME and DooH Initiatives?

Harris Broadcast has for many years sought to leverage its expertise video processing, management, manipulation and storage into market verticals outside of broadcast.  The two most prominent examples of this are the work it does with the military, and its efforts in Digital Signage or “Digital out of Home” (DooH).

For military markets, Harris has long touted its FAME (Full-Motion Video Asset Management Engine) initiative, which seeks to use broadcast technology to capture, manage, analyze and store the vast amounts of video-based content that are now being created in military operations.  Harris has never revealed the extent to which this initiative has gained traction with customers.  However it seems logical that if Harris Broadcast is spun off, the contacts (and contracts) that Harris Corporation have with government customers will live on.  On the other hand it’s also possible that a more focused owner may devote fewer resources to this area in favor of initiatives that are more core to the broadcast industry.

Harris has also very active in the digital signage business, and has had good success with clients including 7-Eleven, Harrods, McDonalds, the Orlando Magic, and Madison Square Garden. Some of these  contracts (especially in the sports market) have undoubtedly resulted in the sale of a lot of Harris Broadcast gear including signal processing and storage products.  The retail-focused projects are more about the digital signage solution than the sell through of broadcast technology.  Thus the issue for DooH markets is similar to the Harris FAME initiative – the contracts will live on, but it’s possible that a new owner may shift resources away from these areas in favor of a more focused approach to the broadcast market.

 

 

Branding — What Happens to the Harris Name?

Harris is one of the biggest names in the broadcast industry, but if its broadcast division is sold off to a PE firm, or is somehow spun out as a separate company, it may have only limited rights to the Harris name.  So depending on the outcome of the sale process, branding could become a major issue for the firm.

So how strong is the Harris brand? As part of our annual Big Broadcast Survey (BBS) study of the broadcast market, we have measured the brand values of Harris Broadcast for the past four years, so we are in a good position to know. 

The 2012 BBS uses a broad variety of metrics to benchmarks how buyers of broadcast technology perceive the strengths and weaknesses of more than 100 broadcast technology brands.  The Harris Broadcast brand is regarded very highly throughout the broadcast industry, and appears to have increased in several key areas over the past twelve months. 

For evidence of the its standing in the market, one only has to look at various broadcast industry message boards to see the outpouring of affection for the Harris broadcast brand. 

 

So what are your thoughts?  There are certain to be many more questions about this deal.  It will be very interesting to watch.

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Related Content:

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Harris Q3 FY 2012 10-Q Filing

Harris 8-K Filing – Restates Fiscal 2011-12 Revenue on Pro Forma Basis (Without Broadcast and Cyber Integrated Solutions)

Press Release: Harris Corporation Reports Fiscal 2012 Third Quarter Results

Harris Fiscal Q3 2012 Analyst Presentation

Harris Fiscal Q3 2012 Conference Call Transcript

TVNewsCheck Article: Tech’s Big Question: What’s Next For Harris?

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Harris Corporation Names New President and CEO

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© Devoncroft Partners. All Rights Reserved.

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Harris Corporation To Divest Broadcast Business

Broadcast technology vendor financials | Posted by Joe Zaller
May 01 2012

After much rumor and industry speculation, Harris Corporation announced today that it will sell the company’s broadcast communications division.

The announcement was made in conjunction with the release of the company’s results for the first quarter of 2012, and just a few months after the company said it would shut down its cyber integrated solutions business.  Both Harris broadcast and Harris cyber integrated solutions were part the company’s Integrated Network Solutions (INS) unit, which was created last year when Harris strategically realigned its business segments

“The decision to divest Broadcast Communications resulted from a thorough review of our business portfolio, which determined that the business is no longer aligned with the company’s long-term strategy,” said new Harris Corp CEO William Brown. “The plan to sell these assets supports our disciplined approach to capital allocation, and we intend to use the proceeds to return cash to shareholders and invest in growing our core businesses.”

“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 believe that the business is best owned by another party.

“Although broadcast is no longer core to our company, we believe the business has the potential for strong growth and margin expansion, is led by a solid leadership team, and has long term value for someone who brings a focused approach to the broadcast and media market.”

The company telegraphed its intentions last quarter when said that despite improving performance in the broadcast division there was still 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.”

In connection with the process of evaluating strategic alternatives for Broadcast Communications, the company recorded in the third quarter a non-cash charge of $407m after-tax, or $3.62 per diluted share, to write down a significant portion of the goodwill and other long-lived assets in Broadcast Communications, resulting in the GAAP loss from continuing operations. Following the close of the quarter, the company approved a plan to divest Broadcast Communications. As a result, current and prior period financial results for Broadcast Communications will be reported as discontinued operations beginning with the fourth quarter of fiscal 2012.

Brown said that Harris had only recently kicked off the sale process for its broadcast business, but that he expects a transaction to take place by the end of 2012. 

The company says it will use approximately $200m from the sale of the broadcast division to buy back its own stock. However, Brown made it clear that Harris “fully expects that the proceeds [from the sale of the broadcast business] will be substantially higher than $200m”, although he declined to speculate on a valuation or even a value range.

In response to a question from Barclays analyst Carter Copeland about the timing of the sale of the company’s broadcast business, Brown said that the divestment of the broadcast business was “Not a new topic with our board, it has been discussed quite frequently over the last several years given where broadcast happens to be… it’s been an active discussion with our board on is it a fit, how do we make it better, what is the timing if we decide to exit… we had a long conversation about it… in our view, given the tough environment that we are facing it’s 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 FY 2013 and beyond.”

Other analysts appeared pleased with the announcement.  For example, Lazzard Capital Markets analyst Michael Lewis, said on the conference call “I have to applaud you on this broadcast divestiture, it just never made sense to me.”

 

Performance of Harris Broadcast

Because Harris broadcast is now part of the company’s INS division, it had been difficult to know its precise financial performance.  The last time full financials for Harris broadcast were available was at the end of the company’s 2011 fiscal year (released in August 2011), when the Harris broadcast communications division had revenue of $553.8m, an increase of 14% versus its performance in fiscal 2010.  At that time, then Harris CEO Howard Lance, the broadcast division in fiscal 2011 had shown “excellent growth” and has “vastly improved” over last year.  It was “profitable both for the quarter and for the fiscal year in total.”

Today the company disclosed that its revenue for the third quarter of fiscal 2011 was $111m, a decline of 14% versus the same period a year ago.  Harris CFO Gary McArthur said that the company’s broadcast business experienced weaker demand in North America and longer international sales lead time, which led to a decline in revenue and “resulted in a non-GAAP operating loss of $4m compared to operating income in the prior year of $2m.”

By looking at the company’s revised financial guidance, it is possible to estimate the revenues of the broadcast business.  Harris had previously said that its total revenue for the full fiscal year 2012 would be ~$6 Billion.  Today it said that it expects to see revenue of $5.42 Billion, excluding the broadcast and cyber solutions businesses. This implies that the combined broadcast and cyber businesses are expected to have combined revenues of approximately $555m for the full fiscal year 2012. However the size of the cyber business has not been disclosed.

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Related Content:

Press Release: Harris Corporation Reports Fiscal 2012 Third Quarter Results

Harris 8-K Filing – Restates Fiscal 2011-12 Revenue on Pro Forma Basis (Without Broadcast and Cyber Integrated Solutions)

Harris Fiscal Q3 2012 Analyst Presentation

Harris Fiscal Q3 2012 Conference Call Transcript

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

Harris Corporation Shuts Down Cyber Integrated Solutions Business

Harris Corporation Strategically Realigns Business Segments; Broadcast Communications Rolled into New “Integrated Network Solutions” Unit

Harris Corporation Names New President and CEO

 

© Devoncroft Partners. All Rights Reserved.

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Harris Corporation Shuts Down Cyber Integrated Solutions Business

broadcast industry technology trends | Posted by Joe Zaller
Feb 27 2012

Harris Corporation, announced that it plans to discontinue its Cyber Integrated Solutions (CIS) operation — which provided remote cloud hosting — and sell its related data center facility in Harrisonburg, Virginia.

According to the company’s 8-K filing with the SEC, the company expects to incur total estimated pre-tax charges of $113 million to $129 million ($70 million to $80 million after-tax), almost all of which are expected to be reflected in the company’s results for the third quarter of fiscal 2012. These estimated pre-tax charges are expected to be comprised of approximately $109m to $125m in impairment of long-lived assets; $1m in one-time employee termination costs, including severance and other benefits; and $3m in other associated exit or disposal costs. Harris expects that approximately $4m of these estimated pre-tax charges will result in future cash expenditures. The company expects to complete these exit and disposal activities by the end of its fiscal 2012.

The CIS operation is part of the company’s Integrated Network Solutions (INS) segment, which was formed last year when Harris strategically realigned its business segments.  In its most recent earnings release, Harris said that the CIS business lost money last quarter, impacting the overall results of the INS segment.

Significantly, the Harris INS segment also includes the company’s Broadcast & Communications Division, and there is speculation about whether the broadcast business may be spun off by the parent company after comments made by new Harris CEO William Brown.

As previously written, Brown said on the company’s most recent earnings call that although the Harris broadcast business performed well during the quarter, with revenue and operating income both up year-over-year, 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 to Discontinue Cyber Hosting Operation; Will Continue Providing Advanced Cyber Security and Cloud-Enabled Applications and Services

Harris 8-K Filing with SEC Detailing Shutdown of CIS Business ­

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

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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© Devoncroft Partners. All Rights Reserved.

 

 

 

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

Broadcast technology vendor financials, Quarterly Results | 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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© Devoncroft Partners. All Rights Reserved.

 

 

 

Harris Corporation Names New President and CEO

Uncategorized | Posted by Joe Zaller
Oct 10 2011

Harris Corporation has appointed William Brown president and chief executive officer effective November 1, 2011. Brown succeeds current CEO Howard Lance, who announced in May 2011 his intention to retire when a successor was named. Lance will continue to serve as chairman, president and CEO through October 31, 2011, and will then serve as non-executive chairman of the Board until December 31, 2011.

Brown joins Harris from United Technologies Corporation where he held several senior leadership roles since he joined the company in 1997. During the past six months, as Senior Vice President, Corporate Strategy and Development, he has been responsible for the company’s global strategic planning and M&A activity.

“I am excited to join Harris at such an important time in the company’s history,” said Brown. “During the past decade Harris has transitioned into a diversified provider of ultra-reliable communications and information technologies to government agencies and commercial markets worldwide. With its strong financial position, robust pipeline of potential opportunities and well-defined areas for new market entry, the company is ideally positioned for further growth. I look forward to working with the company’s talented management team to build on the success it has achieved.”

Brown received bachelor of science and master of science degrees in mechanical engineering from Villanova University and a master of business administration degree from the University of Pennsylvania Wharton School.

 

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