Interview with the CEO of Harris Corp.

Katie Spence of the Motley Fool recently caught up with Bill Brown, the CEO of Harris Corp. ($HRS). Here’s part of their talk:

He continued: “We are focusing our portfolio, maximizing cash flow, returning more capital to investors through higher dividends, and increasing investment in R&D.”

Further, Brown’s statement regarding the focus on the portfolio isn’t just lip service. In fiscal 2011, Harris built a state-of-the-art off-site data center called the Harris Cyber Integration Center, which was supposed to be used for cloud computing. Harris had also expanded into broadcast communication services by offering hardware and software products. However, when Brown took over as CEO in November 2011, he examined Harris’ business portfolio, and he came to a conclusion: “I first took a hard look at our portfolio of businesses and decided that our prospects for success in our broadcast and cyber integrated solutions businesses were low, and we divested them.”

In short, Brown found that the broadcast communication services didn’t align with Harris’ overall strategy and portfolio, and the profits for off-site cloud computing weren’t there — so instead of pouring more money into these ventures to try and force them to work, Harris cut the fat. His decision resulted in a better-aligned company, and additional savings.

“By executing the restructuring actions announced in April faster than expected and expanding their scope somewhat, we generated additional savings in the quarter,” Brown said. “These actions are now expected to generate annualized cost savings of $60 million, versus the $40 million to $50 million originally anticipated.”

Harris started off the year poorly, but has rallied strongly since the spring. Take note that good companies don’t just sit around and wait for the environment to improve. They’re always thinking about new opportunities. That’s the strength of good management.

Posted by on September 10th, 2013 at 11:03 am


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