June 12, 2020 | International, C4ISR
By: Jill Aitoro
WASHINGTON — One year post merger, L3Harris is a third of the way to its goal of shedding roughly $1.5 billion of the company, with COVID-19 slowing progress, said its two top executives in an interview with Defense News.
About $500 million in business has been divested since June 2019, when Harris and L3 Technologies combined into a single, $17 billion company. That total came by way of three deals that shed the EOTech business, the night vision business, and the security detection and automation businesses.
“Out of the gates, we were really running at this,” said CEO Bill Brown, who noted in previous interviews the audacious goal for divestitures of 8-10 percent of total revenue. “We continue to make progress on others, but obviously with the COVID crisis and the financial impacts of that, it's moved some opportunities to the right.”
The sale of the security detection and automation businesses to Leidos for about $1 billion will ultimately be one of if not the biggest divestiture for the company, said Brown, who declined to point to any specific portions of business as currently up for sale or likely to be shed.
Thus far divestitures have been driven either by overlap created by the merger — which subsequently raised the alarm bells of regulators — or by a desire to focus the portfolio even more to become what Brown described as a “powerhouse C4ISR company.”
Brown stopped short of stating any intention to exit the commercial or federal business altogether — even as the former took a significant hit from pandemic fallout: Commercial revenues are expected to be down around 35 percent organically for the year.
Also likely to suffer from the COVID-19 pandemic is international business. Foreign sales, which account for 20 percent of total revenue, will likely remain flat, versus the increase in low to mid-single digits previously expected.
“We identify that as an area where we think we can outperform,” Chris Kubasik, L3Harris chief operating officer, said during the interview. “Clearly the global pandemic applies some pressure, especially in the Middle East with the prices of oil and all the countries having their own bailouts or stimulus plans. Just like the U.S., I think the situation is going to call into question how those countries deal with defense going forward. It's going to be one of these areas that we need to monitor, and are probably going to have to take market share to grow.”
An inability to travel has, however, opened doors to new ways of doing business around the world. Kubasik pointed to a particular deal with a customer in a Far East country that was negotiated via Skype.
“Nobody's really closed for business,” he said. “We've just got to be creative and do it differently. You feel pretty good when you do a one- or two-hour Zoom [video conference], where in the old days it would have taken four days by the time you flew to the country, cleared customs, got a good night's rest, held a meeting, met again and flew back.”
For L3Harris, year two post merger will focus on the remaining $1 billion in divestitures and see a continuation of company integration. In the longer term, those efforts will set the company up nicely for additional acquisitions, which Kubasik called “a clear expectation” for spurring growth.
And C4ISR is the area that will likely be the focus of potential buys.
“The value of those capabilities and technologies will be even greater in the future in a near-peer competition,” Brown said. “It's not the platforms, but what the platforms do and how they interoperate that requires networks and new ways of communicating, which is in the sweet spot of the company. So I would imagine that anything we would do through acquisition would happen in that broad C4ISR domain.”
But for now, he added, the company is focusing on “the basic fundamentals."
"And if we do that really well, then we build credibility to go and do another acquisition, another merger over time. The key is earning the right to do that — building the credibility and the muscle to go down that path, and that's what we're doing today.”
November 6, 2023 | International, Land
The U.S. Navy has commissioned a flurry of activities to mature metal additive manufacturing — and Danville, Virginia, is at the heart of that effort.
February 3, 2021 | International, Land
By: Seth J. Frantzman JERUSALEM — Israel Aerospace Industries on Monday announced more than $100 million in contracts for loitering munitions in three deals that include the Rotem VTOL and the Harop drones. The latter was sold in its land and naval versions. In keeping with the usual policy in Israel, the company did not reveal its customers, only saying that a foreign country acquired Rotem, while the naval and ground versions of Harop were sold in Asia. IAI said the contracts are proof of the importance that modern armies place in having accurate munitions, noting the deals may serve as a “harbinger of additional business activity.” Loitering munitions are sometimes referred to as kamikaze drones because they can be used as a weapon by crashing into a target. These weapons can also hunt down enemy air defenses, among other critical targets. The Harop maritime variant provides an operational solution for a range of vessels, IAI said. “In a complex naval theater, the Harop system gives mission commanders in a fleet of ships the capability to independently and organically collect intelligence, assess targets and strike,” the firm has said. It can also be used as an alternative to or complement sea-to-sea missiles, and is useful in both low- and high-intensity conflict as well as counterterror operations, according to the company. It is also equipped with day and night cameras. The Harop is sometimes seen in sets of nine on land vehicles but can be configured to a different format for use at sea. The electro-optical assets of the Harop aid the man-in-the-loop operator and also provide for deep strike air superiority capabilities, IAI said. The Rotem is a vertical-takeoff-and-landing drone used by several countries. “The system provides a reconnaissance, observation and attack envelope with maximum autonomous performance, integrating a simple and intuitive operation interface that can be used by a single fighter from a touchscreen tablet,” IAI said. According to Yoel Guzansky, a senior fellow at the Institute for National Security Studies at Tel Aviv University, the recent Abraham Accords that saw relations improve between Israel and its neighbors, including the United Arab Emirates and Bahrain, has opened a niche in which Israel is more “kosher” to do deals with. That opens doors in the Gulf region and to Muslim countries globally, where Israeli sales would otherwise be viewed skeptically or be very sensitive. Other events boosting sales, he noted, include tension with Iran and the Nagorno-Karabakh conflict, during which Azerbaijan used loitering munitions against Armenian forces. Israel often doesn't identify the countries to which it sells defense systems because it doesn't want to appear to be part of conflicts, Guzansky explained. But “usually in reports when they don't disclose, it can be an Arab or Muslim country or Singapore, so usual suspects could be Taiwan, Singapore, Philippines, etc.,” he added. “Israel must be sensitive, to think hard at what kind of weapon systems and to whom [it is selling],” Guzansky said, as the government doesn't want to become entangled in a conflict between rival countries or have its arms end up in the hands of those for which they were not intended. Tal Inbar, an expert on defense and missile systems and a former chief of the Space Research Center at the Fisher Institute, also pointed to the recent Armenian-Azeri conflict as showcasing the use of loitering munitions. Amid the Abraham Accords, “I believe we will see [a] dramatic increase in [sales of] Israeli products.” Three and a half decades of experience in producing UAVs has led IAI to this point. Its family of systems also include the Harpy, Mini Harpy and Green Dragon. The Harpy was developed with an anti-radiation seeker to suppress surface-to-air missile radar. IAI predicts a future where militaries will use multiple layers of unmanned and remotely operated systems. The company sees the systems as appropriate for a variety of customers, from wealthy nations seeking high-tech weapons to those customers that require an affordable option to compensate for a lack of fifth-generation warplanes. https://www.defensenews.com/unmanned/2021/02/02/israeli-firm-sells-harop-rotem-kamikaze-drones-to-several-asian-countries
August 6, 2020 | International, C4ISR, Security
Mark Pomerleau Members of the National Guard from New England states concluded a two-week cyber exercise that sought to test the cyber skills of guardsmen and critical infrastructure operators. Cyber Yankee 2020, which took place July 21-31 in New Hampshire, involved more than 200 National Guard members and their civilian counterparts from across New England states, along with some active-duty partners and participants from local, state and federal agencies. In its sixth year, there was less attendance than previous years due to the coronavirus pandemic, but several were able to participate remotely. “Cyber Yankee is primarily a hands-on keyboard cyber incident response exercise for National Guard soldiers and airmen in FEMA Region 1, which are the six New England states,” said Lt. Col. Woody Groton, a member of the New Hampshire National Guard and the director for Cyber Yankee, according to a Facebook post by the New Hampshire Air National Guard. Groton said in a video that the exercise is primarily focused on the electrical and water sector. The exercise is “a great training opportunity for us to work with those people who would actually own the network that we would potentially respond on and for our soldiers and airmen to get that experience and for the engineers from those various entities, they get the training in working with us,” he said. The Guard units within the various states are a critical resource to defend against cyberattacks when they overwhelm localities. “If a large-scale attack happened against a power company, water company, or any other critical department around the state, we would be able to get activated and help them mitigate the threat,” Capt. Frederick Bond, 103rd Air Control Squadron cyberspace operator and exercise Team 3 lead from the Connecticut National Guard, said in a release. “It's similar to when a storm comes and we help remove fallen trees or shovel snow from roofs to help get critical infrastructure going again.” The friendly blue team had to deal with simulated attacks from an opposing red team. Social media posts were used to simulate a real internet environment, where forces must sift through the noise and discern what information is needed to make decisions and identify threat actors. In one case, these actors defaced a public website. “We found some discrepancies including website, it looks like it may have been defaced. The team is digging into finding the source of that defacement and then making steps to correct it,” Master Sgt. Eric Lewis, a blue team member in the New Hampshire Air National Guard, said in a video. Other actions tested included protecting computer files from being stolen or manipulated. “We received intel that potential threat actors may be using a certain capability to transfer files,” said Senior Airman Stephen LaLuna, 103rd Communications Flight cyber systems operations specialist with the Connecticut National Guard. “We see the traffic that's using it, that sets off a flag on our end to look deeper into that. If we determine it is malicious, we send it up the chain with our findings and recommendations to block it.” Officials explained that one of the most critical aspects of these training events is the partnerships built between Guard units, critical infrastructure operators and government entities so that when a crisis breaks out, everyone is acquainted. “We have built enduring partnerships with state government and the critical infrastructure sector. Something that if we did have a major cyberattack against one of those, we would be ready to respond and already know each other,” Groton said. Correction: An earlier version of this story misidentified Lt. Col. Woody Groton. He is with the Army National Guard. https://www.c4isrnet.com/cyber/2020/08/03/new-england-guardsmen-test-their-skills-in-cyber-yankee-2020