January 14, 2009 - Harris Corp. (HRS-NYSE) together with its subsidiaries, operates as a communications and information technology company that serves government and commercial markets worldwide. It operates in four segments: Defense Communications and Electronics, Government Communications Systems, Broadcast Communications, and Harris Stratex Networks.

The Government Communications Systems segment develops, designs, and supports information systems for image and other data collection, processing, analysis, interpretation, display, storage, and retrieval; develops integrated intelligence, surveillance, and reconnaissance solutions; offers enterprise information technology and communications engineering, operations, and support services; and conducts advanced research studies for government agencies, as well as aerospace and defense companies.

The Broadcast Communications segment serves digital and analog media markets, providing infrastructure and networking products and solutions, media and workflow solutions, and television and radio transmission equipment and systems.

The Harris Stratex Networks segment offers wireless transmission network solutions, including microwave radio systems and network management software primarily to mobile and fixed telephone service providers, private network operators, government agencies, transportation and utility companies, public safety agencies, and broadcast system operators. The company was founded in 1916 and is headquartered in Melbourne, Florida.

What caught my attention was the fact that this company is growing in revenues and profits in meaningful amounts. Sales went from $3 billion in 2005 to $5.311 billion in 2008 (fiscal year ends in June). This year, analysts predict the number will be $5.79 billion and next year come in at $6.15 billion. For the last 5 years, average annual sales increased by 17%. For the next 5, predictions are for 9% average annual growth.

Earnings have done even better. In the last 5 years, average per year advances were 32.5%. In 2005, the bottom line was $1.46, then $2.22, followed by $2.80 and $3.39. This year, analysts see $4.10. Next year, $4.56. For the next 5 years, they estimate growth at 17% a year, on average. Quarterly earnings come out on February 4, and the average estimate from 12 analysts is for $1.02, well above the .87 in the same quarter last year. For the March quarter, look for $1.06, much better than the 81 cents of a year ago in the same quarter.

The top and bottom lines were helped by the RF Communications segment in the most recent quarter. Revenues for the division were up 31% in the quarter compared to the same one last year, to $415 million. There was strong demand domestically and internationally for its tactical radios, $160 million in new orders for the products, mostly from the U.S. government and the Middle East. New orders came in from Belize and Kenya for the first time as well.

On the cost side, the company is cutting. While sales have risen, expenses for engineering, sales and adminstrative stayed almost flat for the quarter. Management is lowering personnel and looking to consolidate plants and facilities for further expense reductions.

The company is buying back its own stock since its cash flow is strong, and the balance sheet is in great shape. There's $350 million in cash in the bank. No long term debt comes due for several years. Short term debt is minimal. Look for acquisitions in this difficult economic environment as Harris has the funds to buy companies looking to grow with a stronger partner or simply can't make it on their own.

More numbers: Market Cap is $5.17 billion with 134.58 million shars outstanding. Insiders own 8.76% while institutions own 80%. Price to Book is 2.27. Operating margin for the last 12 months was 13.14%, and the Profit margin was 8.5%. Return on equity is a respectable 21%. Cash per share is $2.59. Total debt is $916.8 million. Current ratio is 1.952. Book Value per share is $17.17. Beta for the last year was 1.42. The 52-week high was $66.71, the low $27.56. The annual dividend is 80 cents for a yield of 2.1%.

Harris, like most stocks, is well off its highs, coming down dramatically in the last 6 months. Still, the company is seeing stronger orders and better earnings. Both are growing in an economy that is definitely shrinking. But its main customers are military and government entities. Both rely on tax receipts for spending. Be aware that those will definitely be reduced over the next year.

- Company Web site: www.harris.com

Ted Allrich