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Harris Corporation (HRS - Analyst Report), a leader in the public safety and professional communications market, has won a $19 million contract in Spotsylvania County, Va. to improve its critical communication network.

As part of the deal, Harris will replace the existing public system network and enhance different communication needs of law enforcement, fire service and other emergency service departments of Spotsylvania County. The new solution will remarkably improve the communication capacity and extend the coverage area to more than 95% of the county.

Harris will install seven new transmission sites based on its Project 25 Technology standard. The new digital radio system features Harris’ VIDA (Voice, Interoperability, Data and Access) network, which is an IP based technology used for flexible, secure and high performance public safety and professional communication.

Harris’ RF Communications segment provides secure radio communications and embedded high-grade encryption solutions for military, government and commercial organizations. At the end of the previous quarter, order backlog in the segment was $1.14 billion including $581 million in the Public Safety and Professional Communications division.

However, Harris is suffering from tightness in the U.S. government spending for defence coupled with a slowdown in international defence expenditures. Of late, the company has won small contracts only and the reduction in budget spending has resulted in delays in tactical radio order procurements. We believe that the ongoing defence budget contraction will continue to affect Harris in the long run and see no immediate growth catalyst.

The current Zacks Consensus Estimate for the third quarter of fiscal 2013 for Harris Corp. is pegged at $1.12 with a growth rate estimate of (19.42%). For 2013 and 2014, the Zacks Consensus Estimate are $4.66 and $4.81 with a growth rate of (10.41%) and 3.22%, respectively.

Currently, Harris carries a Zacks Rank #4 (Sell).

Other Stocks to Consider

Other stocks to consider within the same industry are Qualcomm Inc. (QCOM - Analyst Report), Sonus Networks Inc. (SONS - Snapshot Report) and Motorola Solutions Inc. (MSI - Analyst Report). All the stocks currently carry a Zacks Rank #2 (Buy). 

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