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Harris Corp. (HRS - Analyst Report), a leading defense wireless device supplier, is suffering from tight U.S. government spending for defense and a slowdown in international defense expenditures. Yesterday, the company announced its recently concluded third quarter fiscal 2013 preliminary financial results.

Net earnings per share from continuing operation will be approximately $1.12, which is significantly below the current Zacks Consensus Estimate of $1.26 per share. Similarly, total revenue is expected to be around $1.20 billion, well below the current Zacks Consensus Estimate of $1.326 billion.

The reduction in budget spending that began last month has resulted in delays in tactical radio procurements. This has in turn raised concerns that major tactical radio orders from international markets will also be delayed to later this fiscal or early next fiscal.

At the same time, demand for the high-margin Integrated Network Solutions products were weaker than expected due to a delay in the Healthcare software release and poor performance by the CapRock Communications division.

For the second time in the last one year, Harris reduced its guidance for full year 2013. On a GAAP basis, earnings per share are now expected to be within the range of $3.95 to $4.33. The revised guidance for adjusted earnings per share for fiscal 2013 was $4.60 to $4.70 compared with the prior guidance of $5.00 to $5.20. The first guidance range was $5.10 to $5.30. Total revenue for fiscal 2013 is now expected to decline by 6% to 7% year over year compared with the prior estimate of a decline of 2% to 4%.

Harris depends on the U.S. government contracts for a major part of its revenue. The U.S. is expected to reduce its activity in South-East Asia. Furthermore, a shift in the U.S. government policy in foreign relations may result in the termination of some major international contracts.

To cope up with this juncture, Harris has decided on headcount reduction and curtails its expenses. These cost-control measures will result in $65 million to $115 million pre-tax charges but annual cost savings of $40 million to $50 million.

Other Stocks to Consider

Harris currently holds a Zacks Rank #3 (Hold). Other stocks in this industry that are performing better include Ubiquiti Networks Inc. (UBNT - Analyst Report), Sonus Networks Inc. (SONS - Snapshot Report) and InterDigital Inc. (IDCC - Snapshot Report). All the three stocks carry a Zacks Rank #2 (Buy).  

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