Given that Dr. Harman, who died in 2011, was dividing his time between running the company and his philanthropy and political interests (he served briefly as Undersecretary of Commerce under President Carter), he accepted Paliwal’s terms, if a bit reluctantly. Early days were bumpy. A profit warning sent the stock price plummeting. More trouble followed when German car makers began blacklisting Harman automotive audio products. And for good measure, they were 18 months behind on every product in the pipeline.
Paliwal remembers telling Harman’s board and remaining investors that if they expected all of the company’s problems to be fixed by next quarter they should take their money elsewhere. But he promised something they had not been getting: monthly updates. In addition, he revamped the entire management team of 10 executives, retaining only one person from the former regime. Soon, the board, too, started to change with the addition of two Europeans and one Asian executive.
Today, the Stamford, Connecticut company is a $6 billion, 16,000-employee enterprise with half of its revenue coming from in-vehicle infotainment and the rest made up of lifestyle and professional products and systems. The acquisition of Dallas-based AMX, which develops hardware and software solutions that simplify the way people interact with technology, gives Harman an edge as a leading supplier of turnkey AV solutions. The move prompted Raymond James analyst Tavis McCourt to upgrade the stock from Outperform to Strong Buy.
The company continues its audio innovation with Clari-Fi, a new technology that uses four algorithms to restore the dynamic range of digital music that has had to be compressed to be streamed. Soon, it will be available in portable earbuds, autos and to music-streaming sources for a nominal cost. With 6,000 engineers throughout the company, Harman continues to push on all technological fronts. Recently, Chief Executive spoke to Paliwal at his company headquarters.