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| Type | Public (NYSE: ITT) |
|---|---|
| Predecessor | International Telephone & Telegraph |
| Founded | 1920 |
| Founder(s) | Sosthenes Behn |
| Headquarters |  White Plains, NY, USA |
| Area served | Worldwide |
| Key people | Steven R. Loranger Chairman of the Board President & CEO |
| Industry | Conglomerate |
| Revenue | ▲ $ 11.694 billion (2008) |
| Operating income | ▲ $ 1.210 billion (2008) |
| Net income | ▲ $ 775.20 million (2008) |
| Total assets | ▼ $ 10.480 billion (2008) |
| Total equity | ▼ $ 3.059 billion (2008) |
| Employees | 40,800 June 2009 |
| Website | ITT.com |
ITT Corporation (NYSE: ITT) is a global diversified manufacturing company with 2008 revenues of $11.7 billion. ITT participates in global markets including water and fluids management, defense and security, and motion and flow control. Forbes.com named ITT Corporation to its list of "America's Best Managed Companies" for 2008, and awarded the company the top spot in the conglomerates category.
ITT's water business is the world's largest supplier of pumps and systems to transport, treat and control water and other fluids. The company's defense electronics and services business is one of the ten largest U.S. defense contractors providing defense and security systems, advanced technologies and operational services for military and civilian customers. ITT's motion and flow control business manufactures specialty components for aerospace, transportation and industrial markets.
In 2008, ITT was named to the Dow Jones Sustainability World Index (DJSI World) for the tenth time in recognition of the company's economic, environmental and social performance. ITT is one of the few companies to be included on the list every year since its inception in 1999.
The company was founded in 1920 as International Telephone & Telegraph. During the 1960s and 1970s, under the leadership of then-CEO Harold Geneen the company rose to prominence as the archetypal conglomerate, deriving its growth from hundreds of acquisitions in diversified industries. ITT divested its telecommunications assets in 1986, and in 1995 spun-off its non-manufacturing divisions, later to be purchased by Starwood Hotels & Resorts Worldwide.
Since 1996 the company has been known as ITT Industries, Inc.
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Customers and Programs
Federal Aviation Administration NextGen
In 2007, ITT was awarded a $207 million initial contract by the Federal Aviation Administration (FAA) to lead a team to develop and deploy the Automatic Dependent Surveillance – Broadcast (ADS-B) system. ADS-B is a key component of the FAA's NextGen air traffic control modernization program intended to increase safety and efficiency to meet the growing needs of air transportation. ITT is responsible for overall system integration and engineering and under contract options will operate and maintain the system after deployment through September 2025. The ITT team includes its partners AT&T, Thales North America, WSI, SAIC, PriceWaterhouseCoopers, Aerospace Engineering, Sunhillo, Comsearch, MCS of Tampa, Pragmatics, Washington Consulting Group, Aviation Communications and Surveillance Systems (ACSS), Sandia Aerospace and NCR Corporation.
GeoEye-1
In September 6, 2008, the ITT-build imaging payload was launched aboard the GeoEye-1 satellite to provide high-resolution earth imaging. The satellite has the ability to collect images at 0.41-meter panchromatic (black and white) and 1.65-meter multispectral (color) resolution. GeoEye-1 can precisely locate an object to within three meters of its true location on the Earth's surface. The satellite will also be able to collect up to 700,000 square kilometers of panchromatic imagery per day.
History
ITT was formed in 1920, created from the Puerto Rico Telephone Company co-founded by Sosthenes Behn.[1] Its first major expansion was in 1923 when it consolidated the Spanish Telecoms market into what is now Telefónica.[2] From 1922 to 1925 it purchased a number of European telephone companies. In 1925 it purchased Bell Telephone Manufacturing company in Belgium, which was formerly affiliated with AT&T, and manufactured the rotary system. In the 1930s, ITT grew through purchasing German electronic companies Standard Elektrizitaetsgesellschaft and Mix & Genest, both of which were internationally active companies.
Nazi involvement
According to Anthony Sampson's book The Sovereign State of ITT, one of the first American businessmen Hitler received after taking power in 1933 was Sosthenes Behn, then the CEO of ITT and his German representative, Henry Mann. Antony C. Sutton, in his book Wall Street and the Rise of Hitler, makes the claim that ITT subsidiaries made cash payments to S.S. leader Heinrich Himmler.
ITT, through its subsidiary The Lorenz Company, owned 25% of Focke-Wulf, the German aircraft manufacturer, builder of some of the most successful Luftwaffe fighter aircraft. In addition, Sutton’s book uncovers that ITT owned Huth and Company, G.m.b.H. of Berlin, which made radio and radar parts that were used in equipment going to the Wehrmacht.
Post-war
In 1951, ITT purchased Philo Farnsworth's television company to break into that market. At the time Farnsworth was also developing the Fusor. Also in 1951, ITT bought a majority interest in the Kellogg Switchboard & Supply Company, founded in 1897 as a pioneer in "divided-multiple" telephone switchboards), and bought the remaining shares the next year. ITT changed the company's name to ITT Kellogg. After merging Federal Telephone and Radio Corporation into ITT Kellogg and combining manufacturing operations the name was changed again to ITT Telecommunications.
International telecommunications
International telecommunications manufacturing subsidiaries included STC in Australia and Britain, SEL in Germany, BTM in Belgium, and CGCT and LMT in France. Alec Reeves invented Pulse-code modulation (PCM), upon which all future digital voice communication was based. These companies manufactured equipment according to ITT designs including the (1960s) Pentaconta crossbar switch and (1970s) Metaconta D, L and 10c Stored Program Control exchanges, mostly for sale to their respective national telephone administrations. This equipment was also produced under license in Poznan (Poland), in Yugoslavia, and elsewhere. ITT was the largest owner of the LM Ericsson company in Sweden but sold out in 1960.
Harold Geneen appointment
In 1959 Harold Geneen became CEO. Using leveraged buyouts, he turned the minor building of the 1950s into a major force during the 1960s. In 1963, ITT attempted to purchase the television network ABC for $700 million. The deal was halted by federal antitrust regulators who feared ITT was growing too large. In order to continue growing while not running afoul of antitrust legislation, it moved to acquire companies outside of the telecommunications industry. Under Geneen, ITT bought over 300 companies in the 1960s, including some hostile takeovers. The deals included well-known businesses like the Sheraton Hotel chain, Wonder Bread maker Continental Baking, The Hartford insurance company, and Avis Rent-a-Car. ITT also absorbed smaller operations in auto parts, energy, books, semiconductors and cosmetics. In 1966, ITT acquired Educational Services, Inc., an operator of for-profit schools, which became ITT/ESI.
ITT's sales grew from about $700 million in 1960 to about $8 billion in 1970, and its profit from $29 million to $550 million. However, when the higher interest rates started eating away at profits in the late 1960s, ITT's growth slowed considerably.
In the late 1960s, the British electronics manufacturer Kolster-Brandes, KB for short, had run into trouble with its color television manufacturing, and turned to ITT for help; ITT bought out the company, and for a while, U.K. products were badged "ITT KB" then eventually just ITT. By the late 1970s, ITT had a good presence on the U.K. domestic electrical market in television, audio and portable radio products.
Involvement in 1973 Pinochet coup in Chile
In 1970 ITT owned of 70% of Chitelco, the Chilean Telephone Company, and funded El Mercurio, a Chilean right-wing newspaper. Declassified documents released by the CIA in 2000 suggest that ITT financially helped opponents of Salvador Allende's government prepare a military coup[citation needed].[3] On September 28, 1973, ITT's headquarters in New York City, New York, was bombed by protesters for alleged involvement in the overthrow of the democratically elected and emerging socialist government in Chile[citation needed].
In 1972 newspaper columnist Jack Anderson disclosed a memo of ITT's Washington lobbyist, Dita Beard, which revealed a relationship between ITT's providing funds for the Republican National Convention and a Justice Department settlement of an antitrust suit favorable to ITT.[4]
Geneen remained CEO of ITT until 1977 while many conglomerates had removed their CEOs due to lack of profits. His successor, Rand Araskog, dismantled much of ITT, selling most of its holdings, including the last of ITT's telecommunications businesses.[citation needed]
The business historian Robert Sobel published ITT: The Management of Opportunity in 1982.
The song "International Thief Thief" by Fela Kuti documents the alleged corruption and meddling of the company in Nigerian politics.[11]
Breakup
In 1989, ITT sold all international telecommunications products business to Alcatel, now Alcatel-Lucent. ITT Kellogg was also part of the 1989 sale to Alcatel. The company was then sold to private investors in the U.S. and went by the name Cortelco Kellogg. Today the company is known as Cortelco (Corinth Telecommunications Corporation, named for Corinth, MS headquarters). ITT Educational Services, Inc. (ESI) was spun off through an IPO in 1994, with ITT as an 83% shareholder. ITT merged its long distance division with Metromedia Long Distance, creating Metromedia-ITT. Metromedia-ITT would eventually be acquired by Long Distance Discount Services, Inc. (LDDS) in 1993. LDDS would later change its name to Worldcom in 1995.
In 1995, ITT Corporation split into 3 separate public companies:
- ITT Corp. — In 1997, ITT Corp. completed a merger with Starwood Hotels & Resorts Worldwide, selling off its non-hotel and resorts business. By 1999, ITT completely divested from ITT/ESI; however, the schools still operate as ITT Technical Institute using the ITT name under license.[1] Also in 1999, ITT Corp. dropped the ITT name in favor of Starwood.[2]
- ITT Hartford (insurance) — Today ITT Hartford is still a major insurance company although it has dropped the ITT from its name altogether. The company is now known as The Hartford Financial Services Group, Inc.
- ITT Industries — ITT operated under this name until 2006 and is a major manufacturing and defense contractor business.
- On July 1, 2006, ITT Industries changed its name to ITT Corporation as a result of its shareholders vote on May 9, 2006.
Criminal prosecution
In March 2007, ITT Corporation became the first major defense contractor to be convicted for criminal violation of the Arms Export Control Act. The fines resulted from ITT's outsourcing program, in which they transferred night vision goggles and classified information about countermeasures against laser weapons, including light interference filters to engineers in Singapore, the People's Republic of China, and the United Kingdom.[5] They were fined $100 million US dollars, although they were also given the option of spending half of that sum on research and development of new night vision technology. The United States government will assume rights to the resulting created intellectual property.[6][7]
In its investigation and subsequent ruling the DOJ found that the corporation went to significant lengths to circumvent rules regarding the exports including setting up a front corporation. According to U.S. Attorney John Brownlee the company fought the investigation in order "to essentially run out the clock on the statute of limitations." [8]
Purchase of International Motion Control (IMC)
An agreement was reached in June 26, 2007 for ITT to acquire privately held International Motion Control (IMC) for $395 million. The deal was closed and finalized in September 2007.
Purchase of EDO
An agreement was reached September 18, 2007 for ITT to buy EDO Corporation for $1.7 billion.[9] After EDO shareholders' approval, the deal was closed and finalized on December 20, 2007.
Purchase of Laing
On April 16, 2009, ITT announced it has signed a definitive agreement to acquire Laing GmbH of Germany, a privately held leading producer of energy-efficient circulator pumps primarily used in residential and commercial plumbing and heating, ventilating and air conditioning (HVAC) systems.
Headquarters
1330 Avenue of the Americas in Manhattan, New York City, which was ITT's corporate headquarters prior to its merger with Starwood Hotels & Resorts, was originally owned by the ABC Television Network, which ITT attempted to acquire in 1963. After a financial downturn, ABC moved out of the building known as "Brown Rock" and sold it to a Japanese conglomerate which then in turn leased a good portion out to ITT Corporation.
See also
References
Further reading
- Sobel, Robert (1982). ITT: The Management of Opportunity. New York: Times Books. ISBN 99925-2-968-7.
- Sobel, Robert (1999). The Rise and Fall of the Conglomerate Kings. New York: Beard Books. ISBN 1-89312-247-6.
- Sampson, Anthony (1972). The Sovereign State: The Secret History of ITT. London: Hodder and Stoughton. ISBN 0-340-17195-2.
- Sutton, Antony (1996). Wall Street & the Rise of Hitler. New York: Buccaneer Books. ISBN 1-56849-726-1.
- Araskog, Rand (2000). The ITT Wars: An Insider's View of Hostile Takeovers. New York: Beard Books. ISBN 1-89312-238-7.
- Klein, Naomi (2007). The Shock Doctrine: The Rise of Disaster Capitalism. New York: Metropolitan Books. ISBN 978-3-10-039611-2.
Notes
- ^ Puerto Rico Telephone Company
- ^ Sampson,Anthony:The Sovereign State of ITT, Hodder and Stoughton, 1973
- ^ http://foia.state.gov/Reports/HincheyReport.asp#17
- ^ United States and American History: 1972
- ^ http://biz.yahoo.com/ap/070327/itt_fine.html?.v=3 "ITT Fined $100M for Illegal Tech Exports" Tuesday March 27, 8:44 pm ET; Sue Lindsey, Associated Press Writer
- ^ http://www.theregister.co.uk/2007/03/27/itt_fined_for_illegal_exports/ "ITT Fined for Illegal Exports" Tuesday March 27, The Register; Drew Cullen
- ^ http://pmddtc.state.gov/compliance/consent_agreements/pdf/ITTcorp_ConsentAgreement.pdf "Consent Agreement, 2007: ITT Corporation" U.S. State Department;
- ^ ITT fined up to $100M for illegal night vision exports - Mar. 27, 2007
- ^ ITT Corp. Acquires EDO in $1.7B Deal
External links
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