), a leader in the public safety and professional communication
market, has won a long-term National Airspace System Voice
Communication (NVS) contract from the Federal Aviation
The $291 million contract extends over a period of 15 years and
will provide an Internet protocol (IP) network for the FAA based on
its Commercial off-the-shelf (COTS) voice communication solution
VCS21. The NVS will be installed in air traffic control (ATC)
facilities all across the U.S. and will provide secure digital
communications for pilots, controllers and ground personnel.
Harris is set to offer network integration and management
services and will also provide business continuity planning along
with asset sharing.
Recently, Harris declared its fiscal fourth-quarter 2012
financial results with EPS surpassing the Zacks Consensus Estimate.
In the reported quarter, Government Communication System segment
revenue dipped 0.5% year over year to $497.2 million.
Harris has been providing voice, data and video communication
services for National Air Service (NAS). We believe this contract
will strengthen the company's Government Communication System order
book as the company continues to benefit from FAA's initiative to
modernize the U.S. air traffic control system with a next
generation communication network.
However, slowdown in international as well as national defense
expenditures coupled with intense competition from the likes of
General Dynamics Corp.
Motorola Solutions, Inc.
) may set Harris back.
The current Zacks Consensus Estimate for Harris Corp. is pegged
at $1.12 for the fiscal first quarter of 2013, with a growth rate
estimate of 5.57%. For fiscal years 2013 and 2014, the Zacks
Consensus Estimates stand at $5.14 and $5.26, with a growth rate of
(1.07%) and 2.17%, respectively.
We maintain our long-term Neutral recommendation on Harris Corp.
Currently, HRS has a Zacks #3 Rank, implying a short-term Hold
rating on the stock.
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