Not a great sign of the times when Harris says enough: Melbourne, FL-based Harris announced in its fiscal Q3 call 5/1 that it plans to sell off its Harris Broadcast, which makes automation systems, transmitters, exciter and other hardware and software for radio and TV stations.
Harris CEO William Brown said the business is “no longer aligned with the company’s long-term strategy.” The company began reviewing strategic options for the division last year as it wrote down the value of the business by $407 million.
Most of Harris’ business is from military contracts.
Revenue for the quarter was $1.48 billion compared with $1.41 billion in the prior-year quarter. GAAP loss from continuing operations in the third quarter was $255 million, or $2.27 per diluted share. GAAP income from continuing operations in the prior year was $142 million, or $1.11 per diluted share. In connection with the process of evaluating strategic alternatives for Broadcast Communications, the company recorded in Q3 a non-cash charge of $407 million 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 Q4 of fiscal 2012.
Initial GAAP guidance for fiscal 2013 for income from continuing operations is a range of $5.10 to $5.30 per diluted share. Revenue for fiscal 2013 is expected to be about flat to 2 percent growth compared with fiscal 2012. Fiscal 2013 guidance excludes Broadcast Communications.
The company revised its previous guidance for FY fiscal 2012 from a range of $5.10 to $5.30 for non-GAAP net income per diluted share ($4.92 to $5.12 per diluted share on a GAAP basis), which included Broadcast Communications, to a range of $5.15 to $5.25 for non-GAAP income from continuing operations per diluted share ($1.41 to $1.51 per diluted share on a GAAP basis), excluding Broadcast Communications. Fiscal 2012 revenue excluding Broadcast Communications is now expected to be about $5.45 billion.
Harris Morris, President of Harris Corporation’s Broadcast Communications Business, issued a press release regarding the decision to divest:
“Today, Harris announced its decision to divest the Broadcast Communications business. I fully support this decision and believe that the timing is right for both Harris and Broadcast Communications.
Harris has supported us by investing in our business, allowing us to develop some of the market’s most innovative, solution-based technologies. However, over time Broadcast Communications has become less aligned with the Harris core businesses and long term strategy.
Operating independently or as part of a broadcast or media-focused enterprise will provide us with strategic investment, increased competitive flexibility, and customer focus to lead the continuing transformation in this competitive marketplace.
The decision to divest in no way reflects the quality of the work Broadcast Communications performed in support of our customers and our company. Harris simply determined that Broadcast Communications could provide higher value and operate more effectively under a different ownership model.
In the interim, Broadcast Communications will continue to be a part of Harris Corporation and operate business as usual. Our valued relationships, both longstanding and new, remain our top priority. The global team will continue to work diligently to ensure our commitment to our customers and partners remains steadfast, our execution to fulfill commitments is flawless, and our progress against strategic objectives remains focused.”
RBR-TVBR observation: Hard to say if there will be some takers for the division. Many equipment manufacturers are on hard times as well. It may end up that pieces of Harris Broadcast end up being sold off and what’s left goes by the wayside.