In order to gain more operating efficiency as well as to generate synergies from the recent acquisition of Exelis, leading supplier of communications equipment and services Harris Corp. HRS decided to reorganize its business segments.
Harris took over Exelis on May 29, 2015 for $4.75 billion. Following the acquisition, the company has been working toward integrating the operating units of both the companies to improve management.
The new division, which will be set up in the first quarter of fiscal 2016, will comprise four operating units, namely, Communication Systems, Critical Networks, Electronic Systems and Space and Intelligence Systems.
The Communication Systems segment will include tactical and airborne radios, night vision technology along with defense and public safety networks while the Critical Networks division will take charge of air traffic management, ground network operations, and energy and maritime communications services.
The Electronic Systems and Space segment will handle electronic warfare, avionics, wireless technology, C4I, undersea systems and aerostructures. Meanwhile, the Space and Intelligence Systems division will include complete earth observation, weather, geospatial, space protection and intelligence solutions from advanced sensors and payloads. Moreover, ground processing and information analytics will fall under this unit.
In Apr 2015, Harris won a massive $3.9 billion contract from the U.S. army for rifleman radios and associated services. In the same month, the company was awarded a $238 million IDIQ deal for Weather Program Support Services by the Federal Aviation Administration. Furthermore, the company ended the third quarter of 2015 with $1 billion of order backlog.
We believe that such huge order wins coupled with strong pipeline activity will certainly act as tailwinds for the company, moving ahead.
Harris currently carries a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Better-ranked stocks in this sector include QUALCOMM Incorporated QCOM, Ericsson ERIC and Aviat Networks, Inc. AVNW. All three companies carry a Zacks Rank #2 (Buy).
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