Harris has ways to make its customers communicate. The company, which develops communications products for government and commercial customers in more than 100 countries, makes radio-frequency (RF) and satellite communications and other wireless network transmission equipment; air traffic control systems; and digital network management systems. Harris also offers specialized IT services. Harris' commercial clients come from the construction, energy, health care, maritime, oil, transportation, and utilities industries. One of its biggest customers is the US Department of Defense.
Harris restructured its reporting segments and starting in 2016 (ended July), the company reports results for Communication Systems, Critical Networks, Electronic Systems, and Space and Intelligence Systems. Each segments accounts for 20%-30% of revenue.
Critical Networks provides managed services for air traffic control, energy, and maritime communications as well as ground network operations. It supplies 30% of revenue.
Communication Systems works in tactical communications and defense and public safety networks and accounts for for 25% of revenue.
Space and Intelligence Systems provides Earth observation, environmental, geospatial, space protection, and intelligence products, as well as ground processing and information analytics. It, too, accounts for 25% of revenue.
Electronic Systems offers a range of products for electronic warfare, avionics, wireless technology, C4I, and undersea systems. It generates a fifth of revenue.
Harris operates some 220 locations in Canada, Europe, the Middle East, Central and South America, Africa, Asia, Caribbean, Latin American, and the US, which generates 94% of its overall revenue.
Sales and Marketing
Its primary customers are US government agencies, including prime contractors and supported foreign defense organizations, accounting for about 76% of sales.
Harris reported a 47% jump in revenue to $7.5 billion in 2016 (ended July) with a big assist from the inclusion of Exelis, which Harris acquired in 2015. Revenue from Space and Intelligence Systems increased from business generated by new classified programs, including programs in space superiority and protection. The Electronic Systems segment showed gains from electronic warfare and counter-IED systems. The fast-paced growth of tempered by slowdowns in some DoD programs as well as the energy sector.
The company's net income slid 3% to $324 million in 2016 from impairment of goodwill and other assets related to Harris CapRock Communications stemming from the weakened energy market. Costs related to the Exelis acquisition, workforce reductions, and facility consolidation also contributed to the reduced profit.
In 2016 cash from operating activities was $924 million, an 8% increase from 2015.
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.
The company seeks to find opportunities where it does business in products and geographies by combing products and services in new ways. Hrris also maintains an R&D budget of about 4% of its annual revenue.
Harris sold its Aerostructures business to Albany International for $210 million. With the acquisition of Exelis, Aerostructures fell from Harris' strategic core.
Mergers and Acquisitions
Harris also grows through the use of acquisitions. It bought Exelis, provider of communications products catering to the government, in a transaction worth $4.7 billion. The deal beefed up Harris' presence in the government sector and created a combined company with nearly $8 billion in sales.