Harris Corp. (HRS) has recently won a $69 million contract from an Asian country to support that country’s next phase of command, control and intelligence systems. The key systems that will be supplied by Harris include Falcon Track Situational Awareness Software, Falcon Fighter and a full suite of software-defined tactical radios of Falcon III RF-7800 series.
 
Harris continues its expansion in various markets of South America, Africa, Europe and the South and Middle East . The company has established a solid international dealer network to pursue multi-year contracts throughout these regions. Harris estimated that international markets represent around $4 billion pipeline opportunity. The company has won large-scale multiyear standardization contracts in Mexico, Australia, Algeria, the U.K., Pakistan, Sweden  and Iraq.
 
In a strategic move, Harris has entered into a joint venture with Atlas Telecom, a leading telecommunication systems and security provider in the Middle East, to develop intelligence solutions specifically designed for the United Arab Emirates . The new venture will be called as “Harris Atlas LLC” and will work on enhanced video management and geospatial 3D visualization.
 
As a leading government electronics supplier, Harris is benefiting from the increase in U.S. defense expenditure as well as strong International market conditions. We believe strong momentum in the RF Communications segment will continue in future since Harris’ next-generation Falcon III tactical radio is receiving increasing market traction.
 
Harris has a strong market position in the government communications sector, with a broad product line and an enviable win rate on government contracts. The two defense electronics divisions (Government Communications and RF Communications) are expected to see noticeable pickup in the next couple of years as overall defense spending is likely to remain firm and a major effort to upgrade the defense communications infrastructure remains a priority in several countries.
 
Harris is currently a short-term Zacks #2 Rank (Buy) stock. However, the company depends on the U.S. Government contracts for a major part of its revenue. In future, Federal budgetary pressures may result in deeper than expected cuts in defense spending, which may significantly impact the company’s business prospects. We thus maintain our long-term Neutral recommendation for Harris.
 
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