Harris makes it official, plans to sell off broadcast communications business
Harris Corp. is getting out of the broadcast business. The company announced Tuesday morning, as part of its fiscal-third-quarter report, that it has approved a plan to sell its Broadcast Communications division. The move was by no means unexpected; Harris President/CEO William M. Brown had previously hinted at his concerns regarding the division. Then, in February, the Integrated Network Solutions unit, of which Broadcast Communications is a part, suffered a significant blow when Harris terminated its cyber-integrated-solutions division (which provided remote cloud hosting). All this led up to Tuesday’s announcement that Harris is on its way out of the broadcast sector.
“We are announcing plans to divest Broadcast Communications,” Brown said in the company’s quarterly announcement. “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. 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.”
Until a deal to sell the division is finalised, “Broadcast Communications will continue to be a part of Harris Corp. and operate business as usual,” according to a statement released by Broadcast Communications Division President Harris Morris later in the day.
“I fully support this decision and believe that the timing is right for both Harris and Broadcast Communications,” he said in the statement. “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.
“The decision to divest in no way reflects the quality of the work Broadcast Communications performed in support of our customers and our company,” he continued. “Harris simply determined that Broadcast Communications could provide higher value and operate more effectively under a different ownership model.”
In connection with evaluating strategic alternatives for Broadcast Communications, the company recorded in the third quarter a non-cash after-tax charge of $407 million, 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.
“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,” Morris said.
Overall, Harris Corp. reported revenue in the third quarter of fiscal 2012 of $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.