Top 100: Harris builds on solid results

Harris has delivered growth in a down market but plans moves to build for future growth.

Executive Sheldon Fox said it is a combination of what he called franchise contracts such as the FAA’s Telecommunications Infrastructure (FTI) and the National Oceanic and Atmospheric Administration’s Geostationary Operational Environmental Satellite R Series and new wins that have made the last year a strong one for Harris’ government business. The Melbourne, Fla., company is ranked No. 11 on the Top 100 with $3 billion in prime contracts during the government’s fiscal 2011. The company is seeing growth overall so far in 2012 too, reporting revenue of $4.4 billion for the first three-quarters of its fiscal 2012, which ends June 30, compared to $4.3 billion last year. It is reporting a net loss of $98.5 million because it has taken a rightoff of $407 million for the value of its Broadcast Communications unit, which the company plans to sell. On the growth side of the equation, FTI is a bright spot for Harris. The company won the contract in 2002 to provide the communications infrastructure connecting FAA facilities and recently the FAA extended the contract for another five years, which pushes the end of the contract out to 2022.

A solid year in a down market is something to crow about but for Harris Corp. it merely lays a foundation for more growth as the market turns in the coming years.

The extension is worth between $1 billion and $1.5 billion, said Fox, group president of Harris’ Government Communications Systems division, one of the company’s government-focused units.

The company also has the RF Communications business led by Dana Mehnert, group president, and the Integrated Network Solutions, led by Dan Pearson, chief operating officer and acting group president.

The review of Harris' long-term strategy started in earnest after the company brought in new President and CEO William Brown, who replaced retiring CEO Howard Lance, who had been chairman and CEO since 2003.

One area of emphasis across Harris is being cost effective, Fox said.

“In my division, I have 6,000 people and 3,200 of them are engineers. One of the things we are trying to do is take our ideas and innovations and focus on affordability,” he said. “We’ve done that in previous years, but our new CEO has brought another level of emphasis.”

Some of the business opportunities that Fox said he sees ahead for his division include full-motion video, tactical ISR and the ground segments of military satellite communications.

“Even with additional military satellites, there is still a need for commercial satellites and there is a need for more ground stations,” he said.

Another new opportunity Harris is pursuing is the Navy’s Next Generation Enterprise Network. Harris and Computer Sciences Corp. are leading a team that is going head to head with Hewlett-Packard Co. for the $5 billion contract to run the Navy’s IT infrastructure.

Harris IT Services, led by Ted Hengst, is taking the lead on that opportunity for the company, Fox said.

Like other contractors in the government sector, Harris also is focused on the biggest unknown for the coming year– will sequestration begin in January 2013 and bring deep, automatic cuts to government budgets?

“No one has a bead on what will happen,” Fox said, but he is seeing signs of customers trying to plan for how they will weather cuts of 10 percent or more.

“We are trying to do similar things. We are focused on what we can control – execution, delivery, quality and costs,” Fox said. “We have a lot of emphasis on operational efficiency and anything else we have to do to be more competitive.”