HRS Harris Corp.

A leading supplier of communications equipment and services, Harris Corp. (HRS) recently appointed William M. Brown as the president and chief executive officer (CEO) effective November 1, 2011.

William M. Brown, aged 48, will succeed Howard L.Lance, the former CEO and president of Harris. Howard L.Lance, aged 55, joined Harris in 2003 and despite resigning from his position as the company’s CEO will remain as the non-executive chairman of the company till the end of 2011 and will also act as the senior advisor to the board till 2012.

During Lance’s tenure, the company witnessed consistent growth across all its operations. Revenue and earnings per share (EPS) grew at a six-year (2004-2010) compounded annual growth rate (CAGR) of 18% and 54%, respectively.

William Brown has earlier held an important position in United Technologies Corporation (UTX) and has played pivotal roles in the decision-making process of the company since 1997.

Brown has an excellent track record, where he converted a $6.5 billion Fire & Security division of UTC, which he joined before United Technologies, into a $100 billion profit making division. In UTC, Brown supervised a huge team of approximately 45,000 workers spread across 41 factories and 350 branches in 35 countries.

As far as Brown’s qualification is concerned, he holds a masters degree in business management from University of Pennsylvania Wharton School and also a master degree in mechanical engineering from Villanova University. We believe his technical expertise and managerial knowledge along with a great track record will benefit Harris going forward.

Continuous contract wins and huge order back logs coupled with appointment of new CEO will support future growth for Harris. Moreover, accretive share repurchase plan and the recent dividend hike will act as positive catalysts for the stock going forward.

However, stiff competition coupled with reduction on U.S. defense expenditure as Harris is heavily dependent on U.S. government-based projects may act as headwinds for the stock going forward.

We, thus, maintain our long-term Neutral recommendation forHarris Corporation.Currently, Harris Corporation has a Zacks#3 Rank, implying a short-term Hold rating on the stock.

 
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