), a leader in the public safety and professional communication
market, received an order from Middle East worth $25 million for
its Falcon II high frequency tactical radios as a part of the
country's effort to upgrade its military communication system.
As a part of the deal, Harris will supply its path breaking
Falcon II RF-5800H base stations, Vehicular systems and manpack
radios to provide terrestrial voice and data communications in
remote and inaccessible areas for the country's armed forces.
Harris's RF-5800H offers advanced features like third
generation-Automatic Link Establishment for initiating contact
between two HF radios coupled with providing links for data
sharing. Harris's Falcon II HF manpack radio provides reliable
long-range communications with enhanced secure voice and data
Harris's RF Communications segment provides secure radio
communications and embedded high-grade encryption solutions for
military, government and commercial organizations. The company's
Falcon II software-based radios other than easily adapting latest
technology also allows new features to be added quickly and cost
Growing momentum in the RF Communications segment in the
international markets is likely to continue since Harris's
next-generation Falcon II and Falcon III tactical radio products
are receiving increasing market traction. At the end of the
previous quarter, order backlog came in at $1.3 billion including
$665 million in Tactical Radio Communications segment.
We believe, this order from the Middle East will not only expand
the company's international presence and order book but will also
reduce its dependence on the U.S. government, which has decided to
squeeze its defense budget by nearly $500 billion over the next
However, slowdown in international as well as national defense
expenditures coupled with intense competition from the likes of
General Dynamics Corp.
Motorola Solutions, Inc.
) can put Harris on the back foot.
The current Zacks Consensus Estimate for Harris Corp. is pegged
at $1.12 for the fiscal first quarter 2013 with a growth rate
estimate of 5.92%. For fiscal years 2013 and 2014, the Zacks
Consensus Estimates stand at $5.15 and $5.28 with a growth rate of
(0.91%) and 2.52% 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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