Harris Corporation (NYSE:HRS), along with all the major communications equipment companies, is facing several near-term concerns as the contraction of the U.S. and international defense expenditures threaten revenue. The big benefit to Harris, compared with major peers, is that its government communications systems segment makes up only 35% of revenue.
Harris is looking to hedge the negatives of defense budget cuts by emphasizing other businesses, including the IT transformation of the healthcare industry, public safety communications, and maritime communications. Harris Corporation (NYSE:HRS) should also benefit from local and federal government agencies that are focusing on improving the technological capabilities of communications systems.
Its integrated network-solutions segment provides mission-critical end-to-end IT services, standards-based healthcare inter-operability and image-management solutions, accounting for nearly 30% of the company’s revenue.
What’s more is its CapRock Communications acquisition has given the company a strong foothold in the energy market. CapRock provides managed satellite communications solutions for energy, government and maritime industries. Similarly, the acquisition of the Global Connectivity Services business from Schlumberger upped its capabilities in mission-critical satellite communications market.
Going into 2013, the hedge fund sentiment was positive for Harris Corporation (NYSE:HRS), with a total of 21 hedge funds long the stock, a 17% increase from the previous quarter. Michael Price’s MFP Investors has the most valuable position in Harris, worth close to $16 million, accounting for 2.3% of its total 13F portfolio.
What about the comps?