Harman International Industries (NYSE: HAR) is an international audio and infotainment equipment company. The company designs, manufactures and markets audio and infotainment products for the car, the home, theatres and venues, as well as electronics for audio professionals. Harman International's consumer group makes loudspeakers, CD and DVD players, CD recorders, and amplifiers under several brand names such as Harman Kardon, JBL, and Infinity. Harman's automotive division sells branded audio systems through several car makers, including Daimler/Mercedes, Toyota/Lexus, BMW, and General Motors. Its professional unit makes audio equipment, such as studio monitors, amplifiers, microphones, and mixing consoles for recording studios, cinemas, touring performers, and others. The company is headquartered in Stamford, Connecticut, and maintains major operations in the Americas, Europe, and Asia. Harman International includes many consumer and specialty brands targeting specific audio and electronics product categories.
Dr. Sidney Harman and Bernard Kardon founded the predecessor to Harman International, Harman Kardon, in 1953. Both Harman and Kardon were engineers by training and had worked at the Bogen Company, which was then the top manufacturer of public address systems. Their collaboration helped to create a new industry: high-fidelity audio. As early as 1954, the company simplified access to high-fidelity sound for the non technical consumer with the introduction of the world’s first true hi-fi receiver, the Festival D1000. This product incorporated a tuner, control unit and power amplifier in a single chassis. Four years later, Harman Kardon presented the world’s first stereo receiver.
Harman bought out his partner in 1956 and then expanded Harman Kardon into an audio powerhouse, according to a biography written by the Consumer Electronics Hall of Fame. . By the mid-1970s Harman-Kardon was a powerhouse in the U.S. stereo industry. The company profited by pioneering the concept of separate components; instead of selling stereo systems as integrated units, Harman-Kardon began selling separate receivers, speakers, amplifiers, and other pieces that buyers could purchase separately and wire together to tailor their own home sound system.
In the 1970s, Sidney Harman accepted an appointment in the Carter administration undersecretary of the Department of Commerce. When Harman took office in 1976, he sold his company to conglomerate Beatrice Foods to avoid a conflict of interest. Beatrice promptly sold many portions of the company, including the original Harman Kardon division, and by 1980 only 60% of the original company remained.
When he left government in 1980, he created Harman International Industries and reacquired a number of businesses he sold to Beatrice. The company continued its growth plan with a string of acquisitions throughout the 1980s that pushed Harman International's sales from about $80 million in 1981 to more than $200 million by 1986, and then to more than $500 million by 1989. Harman International went public in 1986 with a stock offering on the New York Stock Exchange. Cash from that sale was used to, among many other purchases, buy Soundcraft, a U.K. producer of professional mixing boards, in 1988, and later Salt Lake City digital electronics producer DOD Electronics Corp. By 1990, Harman International was selling consumer audio gear under such brands as JBL, Harman Kardon, Infinity and Epicure loudspeakers, as well as professional audio systems with such brands as JBL Professional, UREI, Soundcraft, Allen & Heath, Studer, DOD, Lexicon, AKG, BSS, Orban, DBX, Quested and Turbosound.
Over the years, Harman’s portfolio of brands and technologies have led the way in many significant audio innovations. Many of the company’s audio technologies have become standards in the audio industry. In addition to the Festival D1000, the company’s legendary audio industry “firsts” include the TA230 stereo receiver (1958); the first ultrawide-bandwidth amplifier, the Citation II (1959); the first cassette deck with Dolby* B noise reduction, the CAD5 (1970); and the first high-current-capability amplifier, the Citation XX (1980).
Harman International has also developed a number of proprietary technologies, which are incorporated into a number of its branded products, including Logic 7® and VMAx® Virtual Theater multichannel audio processing, and EzSet automatic speaker-level calibration.
In 1995, Harman International moved aggressively into the automotive electronics business by acquiring Becker GmbH of Karlsbad, Germany for approximately US$60 million. Becker was formed in the late 1940's and produced some of the earliest car radios. By the 1990's Becker was providing both aftermarket car audio systems as well as custom OEM in-dash systems to predominantly European automakers. After its acquisition, the Harman Becker Automotive Systems group, as it became known, provided automakers with both audio systems leveraging Harman's stable of consumer brands, as well as infotainment systems combining navigation, wireless connectivity, and multimedia capabilities. The automotive division grew quickly, and by the mid-2000's was Harman International's biggest business unit, contributing over US$2billion in revenues.
The company has benefited from growing demand for increasingly sophisticated information and entertainment devices (WiFi, Televisions, MP3 players, and GPS) in cars. This market is still largely in its infancy with penetration rates of less than 20% in Europe and less than 10% in the United States. However, the company's high exposure to auto manufacturers makes it subject to the cyclicality of the auto industry.
Private Equity Attempt
Harman International Industries was to disappear from NYSE in Q3/2007 due to buy-out by KKR and GSCP. However, as of mid September 2007, KKR announced they would back out of the deal. Harman shares had plummeted by more than 24% that day on the news.
On July 1, 2008, Sidney Harman, was succeeded by Dinesh C. Paliwal as Chairman of the Board. Paliwal was president, CEO and vice chairman since joining the company in July 2007.