) received a major contract to supply tactical area
communications system for the border security program of Brazil.
Harris will work with SAVIS Tecnologia e Sistemas S/A for
modernizing 650 kilometers of border area in the western part of
Brazil. This will be the largest border security program in Latin
America. However, the financial term of the contract is yet to be
Harris' tactical communications system portfolio includes its
industry-leading Falcom III 7800 tactical radio family. Earlier,
Harris was selected as one of the 20 contractors to compete for
work under the Global Tactical Advanced Communications Systems
contract initiated by the U.S. Army's Program Executive
Office-Command Communications and Control. The total value of the
contract is $10 billion over a 5-year period to supply advanced
communications technologies such as, wireless networking and
tactical satellite communications.
We believe that this Brazilian contract is extremely valuable
for Harris, especially under current circumstances. The companyis
suffering from tightness in the U.S. government spending for
defense coupled with a slowdown in international defense
expenditures. The reduction in budget spending resulted in delays
in tactical radio procurements coupled with the growing concern
that major tactical radio orders from international markets will
be postponed to later this fiscal or early in the next. We
believe that the ongoing defense budget contraction will continue
to affect Harris in the long run.
To cope up with this juncture, Harris has decided on reducing
expenses and headcount. These cost-control measures will result
in $65 million to $115 million pre-tax charges but annual cost
savings of $40 million to $50 million. Harris currently has a
Zacks Rank #4 (Sell).
Other Stocks to Consider
While we prefer to avoid Harris until we see signs of
improvement in the company's performance,otherstocks in this
industry that are worth considering include
Ubiquiti Networks Inc.
). While ShorTel and Ubiquiti currently have a Zacks Rank #1
(Strong Buy), InterDigital has a Zacks Rank #2 (Buy).
HARRIS CORP (HRS): Free Stock Analysis Report
INTERDIGITL INC (IDCC): Free Stock Analysis
SHORETEL INC (SHOR): Free Stock Analysis
UBIQUITI NETWRK (UBNT): Free Stock Analysis
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