Harris Wins Major IDIQ Contract - Analyst Blog

Harris Corp. (HRS), a member of The Boeing Company team, has won a
part of a $7 billion Indefinite Quantity/Indefinite Delivery (IDIQ)
contract to provide the Federal Aviation Administration (FAA) with mission
analysis and systems engineering services.

This 10 year contract aims to offer support to the National Airspace
System’s transition to the Next Generation Air Transportation System
(NextGen), which is an extensive transformation of the entire U.S. air
transport system to cater to future demands and avoid gridlock in the sky and
at airports.

Harris is a long-time FAA contractor and has developed weather-radar data
processing, voice-switching and control systems, and other technologies in
past years.

Harris has a strong market position in the government communications
sector with a broad product line and an enviable win rate on government
contracts (over 60% historically). The two defense electronics divisions
(Government Communications and RF Communications) are anticipated to drive a
double-digit revenue growth in the fourth quarter through higher orders
across all of its segments.

As a leading government electronics supplier, Harris is benefiting from
the increase in U.S. defense expenditure as well as robust market
conditions for microwave communications solutions. Harris has a
sustainable and diversified product pipeline with a potential market size
of $15 billion. During the third quarter of fiscal 2010, the company
generated $1.45 billion of new orders, up almost 40.8% year over year.

Harris faces intense competition from Boeing Co. (BA), General Dynamics
Corp. (GD) and Raytheon Co. (RTN). We maintain our current recommendation
of Neutral for Harris.