Harris Stratex belongs to a bigger, better company called Harris. HSTX is a result of the merger of Harris’ microwave communications division, which makes radios for wireless networks, with Stratex Networks. The deal was great for Harris, but not necessarily so for investors in HSTX.
Harris got to consolidate its smallest, least profitable division with its competitor to create the largest company in the microwave communications space. This allowed the company to take microwave off its income statement, which Cramer likes, while retaining control over the division. Harris owns all the class B shares, which gives them the power to appoint five of nine directors. Harris Stratex is a great example of a terrible practice: stock market feudalism. In this company, third estate only gets four board seats, and since you are the third estate, that’s no good, Cramer says.