Textron Inc. (TXT), Manitowoc Company, Inc. (MTW), Harris Corporation (HRS): Three Companies That Need to Break Up

Despite the exceptional growth of Manitowoc Company, Inc. (NYSE:MTW) Foodservice, longtime shareholders are still seeing red due to the exceptional poor performance of Manitowoc Cranes. Shares of Manitowoc Company, Inc. (NYSE:MTW) are down about 60% since the beginning of 2008.

A failure to communicate
Unlike Textron Inc. (NYSE:TXT) and Manitowoc Company, Inc. (NYSE:MTW), at least Harris Corporation (NYSE:HRS)‘s business offerings make sense together. Harris Corporation (NYSE:HRS) is a telecommunications equipment company… and only a telecommunications equipment company. But it has two very different types of customers for its products: government and corporate.

Harris Corporation (NYSE:HRS)’ government business develops products for defense, national intelligence and federal civilian agencies such as military aircraft avionics, border security systems, and air traffic control networks. The corporate business sells products and services that include digital signage for professional sports arenas, IT services for the health care industry, and providing entertainment solutions for cruise ships (just to name a few.)

Harris Corporation (NYSE:HRS)’ government business has the slower growth of the two, but it has the benefit of predictable government contracts and cash generation. As a separate company, this government business would be perfect for income investors seeking higher dividend yields.

Harris’ corporate business is comparatively more risky, but is also faster-growing, with the potential for a higher earnings multiple. As a separate company, this corporate business would be perfect for growth investors seeking share price appreciation. Together, though, these two divisions are perfect for neither class of investors. They’re certainly not bad together, but they’re arguably much better apart.

Foolish bottom line
For publicly traded companies like these, breaking up is fairly easy to do. More importantly, it can also be quite beneficial for companies and individual shareholders alike. Keep an eye on the three businesses above; if they show signs of splitting up, you may want to give them a closer look.

The article 3 Companies That Need to Break Up originally appeared on Fool.com and is written by Matthew Luke.

Matthew Luke owns shares of Beam. The Motley Fool recommends Beam and McDonald’s. The Motley Fool owns shares of McDonald’s and Textron.

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