During its investor call for the third quarter earnings for fiscal 2012, Harris Corporation announced that it would be selling its Broadcast Communications division, which supplies a wide range of broadcast technologies to stations and TV operations around the world.
In the call, the company reported a GAAP loss of $255 million on $1.48 billion in revenue and took "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," as part of its plan to sell off the division.
William M. Brown joined Harris in November as its president and chief executive officer in November of 2011 and in the earnings call earlier this year, Brown noted that they were reevaluating their businesses, which prompted some speculation that the broadcast division might be sold so that Harris could focus on its much larger government, military and private sector businesses.
In a statement on Tuesday, Brown noted that "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."
A Harris spokesman noted that the Broadcast Communications division was in "good shape" financially with no debt and a "positive cash flow" so that it was well positioned to operate as a stand-alone operation after a sale.
In the run-up to the sale, it would also be business as usual under the existing management and staff, the spokesman explained.
"We are not discontinuing operations," the spokesman stressed. "We are not shutting down operations. We continue on as we always have. No one is losing jobs. We will continue to work to close deals and win new customers and to support existing ones."
Harris does not break out financials for the Broadcast Communications division, which is part of its Integrated Network Solutions sector. Within that group, the company did note that "strong organic growth in Harris CapRock Communications and Healthcare Solutions was offset by declining revenue in IT Services from the loss of the Patriot program and in Broadcast Communications as a result of weaker demand in North America and longer international sales lead times."
In a letter issued after the announcement of the sales, Harris Morris, president of the Broadcast Communications Division at Harris Corporation noted that "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."
Morris also stressed that "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."
He also noted that the division "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."
