Defense communications work continues to fuel opportunities for Harris Corp.
Despite a weak national economy, Harris Corp., No. 13 on Washington Technology’s list of Top 100 prime federal contractors, posted a revenue increase of more than 25 percent in 2008: $5.4 billion, up from $4.3 billion in 2007.
Harris is doing what it does best: assured communications, said Dan Pearson, group president of Harris Government Communications Systems Division. Protecting and expanding the core business are primary, “we also try to look at new areas,” Pearson said. One such new area is health information technology.
In September 2008, Harris launched its Nationwide Health Information Network-Connect, which lets federal and private health care providers securely share patient data. In February, the Social Security Administration began using Connect, and more than a dozen other agencies will join SSA by year’s end.
The company also was selected to develop the Defense Department’s global Healthcare Artifact and Image Management Solution.
“A lot of people do electronic health records picture archiving communications systems (EHR PACS),” Pearson said. “We don’t want to be a commodity there — put us in secure communications, maybe the data protection part, managing the network,” he said.
In February, Harris delivered its proposed ground segment for the National Oceanic and Atmospheric Administration’s Geostationary Operational Environmental Satellite-R Series program.
Under a $600 million, 10-year contract awarded in April for the Army’s Modernization of Enterprise Terminals program, Harris’ next-generation military satellite communications terminals will provide the worldwide backbone for high-priority military communications and missile defense systems.
Harris’ satellite technology also underpins the proposed infrastructure that supports current and future Global Positioning System satellites — a contract that could be worth more than $100 million to the company over 20 years.
In April, Harris won a spot on the General Services Administration’s $50 billion Alliant contract. It’s also designing a new communication system for NASA — for a spacesuit. It even won a pair of technical Emmy awards in January.
However, military and intelligence business keep the company humming.
A $150 million award in April from the Army for Falcon III high-bandwidth tactical radios could help assure revenue for 2009. General Dynamics Corp. won the DOD contract to develop a new Joint Tactical Radio System tactical radio, but Harris’ Falcon III is the only JTRS-approved manpack radio on the market.
“It doesn’t do everything the one [General Dynamics] is developing, but it’s very, very close, and it’s available today,” said Chris Donaghey, a director at investment firm SunTrust Robinson Humphrey.
If the deployed radios get positive reviews, it could trigger a widespread upgrade from the more than 300,000 analog radios in the field today to the digital Falcon III, he said. “Harris doesn’t need to capture all that business, just a few percentage points to make a significant difference,” Donaghey said.
In January, Defense Secretary Robert Gates told the Senate Armed Services Committee that he planned to pursue more “75 percent solutions instead of smaller quantities of 99 percent exquisite systems.”
Harris acquired Tyco Electronics Wireless Systems for $675 million in April to help it grab more of the $9 billion federal land mobile radio market.
The Tyco wireless unit, M/A Com, supplies wireless communications systems to law enforcement, first responders and public service organizations and reported $461 million in revenue in 2008.
“The acquisition will immediately boost Harris’ fledgling government radio business into a solid No. 2 position [behind Motorola Co.] while also providing customer diversification and complementary sales channels,” said Chris Quilty, an analyst at investment firm Raymond James Associates Inc.
“A concern for investors, however, is a new administration is in office, and there’s uncertainty about the timing of the drawdown in Iraq,” Donaghey said. “That’s going to have a [negative] impact on Harris’ tactical radio business. Of course, that’s presuming Afghanistan doesn’t become a more active engagement.”
Two Harris acquisitions in 2007 turned out to have radically different results. The acquisition of Multimax and its 2,000 to 3,000 employees has “let us position ourselves in different areas and streamline our processes,” Pearson said. “It’s been a very, very good acquisition for Harris.”
But just months after acquiring Stratex Networks Inc., a wireless transmission solution provider, a major accounting error was discovered, and shareholder backlash ensued. Last month, Harris decided to spin off its Harris Stratex Networks unit.
Competition in the Washington, D.C., area is especially tough, Pearson said. “But my experience, in my 32-year Harris career, is that people just want to come to work and innovate and do good things for the country and be challenged. If you can do that and treat them with respect, they’ll stay. Historically, we’ve done fairly well keeping people challenged, invigorated and wanting to come to work every day.”
Harris’ employment totals support Pearson’s theory. Harris’ staffing has remained at about 16,000. About 1,500 employees are in two Washington facilities that opened in October.
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