Harris Corporation (HRS) increased its quarterly cash dividend to 25 cents per share versus a prior quarterly dividend of 22 cents per share, which will be paid on September 17, 2010, to shareholders of record as of September 8, 2010.  The annual dividend rate also increased from 88 cents per share to $1.00 per share.
 
The increase in dividend was attributable to the strong fourth quarter 2010 results and the company’s excellent cash flow position. Exceptional results were based on better-than-expected demand for its tactical radio products, several government communications products and excellent operating efficiency.
 
In fourth-quarter 2010, consolidated revenues were $1,455.9 million, which came in below the Zacks Consensus Estimate of $1,491 million, but improved 12.5% year over year. Total orders in the fourth quarter were $1.72 billion compared with $1.29 billion in the prior-year quarter. Adjusted (excluding acquisition-related costs) earnings per share (EPS) of $1.24 were exactly in line with the Zacks Consensus Estimate.
 
Due to the acquisition of CapRock Communications, the company increased its FY11 guidance for non-GAAP income from continuing operations to a range of $4.60 to $4.70 per diluted share ($4.55 to $4.65 per diluted share on a GAAP basis), representing a year-over-year increase of 4% to 6%. This compares with the previous range of $4.55 to $4.65 per diluted share ($4.55 to $4.65 per diluted share on a GAAP basis). FY11 non-GAAP earnings guidance excludes acquisition-related costs.
 
FY11 total revenue is now expected between $5.9 billion and $6.0 billion, representing a year-over-year increase of 13% to 15%. This compares with a previous range of $5.5 billion to $5.6 billion.
 
Beginning 2011, the company expects to continue its positive momentum based on record new orders received. The company intends to focus on increasing its shareholder value.
 
Harris faces intense competition from the likes of Boeing Co. (BA), General Dynamics Corp. (GD) and Raytheon Co. (RTN).
 
Harris is currently a short-term Zacks #2 Rank (‘Buy’) stock. We believe this is primarily due to the company’s strong market position in several niche communications equipment categories, its favorable near- to long-term outlook and solid finances.
 
Harris depends on the U.S. government contracts for a major part of its revenues. In the future, Federal budgetary pressures may result in deeper-than-expected cuts in defense spending, which could significantly impact Harris’ business prospects. Furthermore, a shift in the U.S. government policy in foreign relations may result in the termination of some major international contracts. We, therefore, maintain our long-term Neutral recommendation for Harris.
 
BOEING CO (BA): Free Stock Analysis Report
 
GENL DYNAMICS (GD): Free Stock Analysis Report
 
HARRIS CORP (HRS): Free Stock Analysis Report
 
RAYTHEON CO (RTN): Free Stock Analysis Report
 
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