Harris has ways to make its customers communicate. The company, which develops communications products for government and commercial customers in more than 125 countries, makes radio-frequency (RF) and satellite communications and other wireless network transmission equipment; air traffic control systems; and digital network broadcasting and management systems. Harris also offers specialized IT services. Its primary customers are US government agencies, including prime contractors and supported foreign militaries, accounting for about 70% of sales. Harris' commercial clients come from the construction, energy, health care, maritime, oil, transportation, and utilities industries.
Harris' largest segment, RF communications (40% of sales), offers radio communications and encryption technology for the US DoD, international tactical communications, and public safety and professional communications. Government communications systems (about a third of sales) provides advanced communications and information systems to government civil, national intelligence, and defense programs. Civil settings include aviation and weather; national intelligence applications provide tracking, surveillance, cyber security and other functions; defense programs offers communications and information processing in support of missions and other defense operations. Integrated network solutions (less than 30%) offers IT services, managed satellite and terrestrial communications, and health care interoperability and image management.
Harris has seen a steady rise in sales over the years, but revenues finally dipped in fiscal 2012 (ended June), by 8% to $5.5 billion. Some of that came, however, from discontinued operations, and its continuing operations did sustain annual growth, though only barely, rising less than 1% over the previous year. Sales growth in its largest segment, RF communications, was hampered by a change in the way the DoD market was driven. Sales for its integrated network solutions saw growth from its CapRock and Schlumberger GCS acquisitions, as well as from health care solutions, which included another recent acquisition, Carefx. Harris' government communications segment achieved a modest 3% increase. Although the company preserved its streak of profitability, it netted only $30 million, resulting in its narrowest margin in the past decade at little more than half a percent.
Harris considers its greatest opportunities for growth to be in managed satellite communications, public safety and professional communications, health care IT, and emerging national markets. Affected sectors include energy, maritime, and government. The continued global deployment of the wireless 4G LTE standard will help fuel growth. In a bid to court more international customers, Harris opened a European headquarters in the UK in 2010. More recently, the company is focusing on Brazil and the Middle East. To better focus on these growth areas, Harris in late 2012 agreed to sell its Broadcast Communications unit, which includes TV and radio transmission systems, digital signage, and other digital media management services.
Harris' purchase of managed satellite communications services provider CapRock Communications earlier in the year. That $525 million deal added a range of remote communication and support services for the oil exploration and drilling, military, maritime, and mining industries to Harris' portfolio, and provided the company with new customers for its satellite equipment (part of its integrated network solutions division). It also marked the company's entry into the energy market.
Further strengthening its growing satellite communications business for the energy industry, the CapRock deal was complemented by the purchase that year of the global communications services business of oil field services provider Schlumberger for nearly $350 million. Known as Schlumberger Global Connectivity Services (GCS), the division provided communications and support services to clients in the global oil and gas industries. Its key operations are located in Norway, Singapore, the UK, and the US.
Harris has also added to its IT services and software operations through acquisitions. In 2011 it paid $155 million for Carefx, a private company that offered Fusionfx, a software platform that compiles patient information from different systems and departments and delivers it in one program. The purchase put Harris in position to provide services related to the integration of the VA and Military Health Systems. In 2010 Harris bought SignaCert, a provider of IT compliance applications that combine change detection capabilities with both custom and commercial lists of approved software, so-called whitelists. – less