Byl Matthew Daneman
Democrat and Chronicle
Pointing in large part to troubles brewing in its Rochester-based military radio business, Harris Corp. on Thursday lowered investors’ expectations for how fiscal year 2013 will shake out and said layoffs were coming.
The Florida-based defense contractor said that for the fiscal year ending June 29, it now expects profits from continuing operations of $4.60 to $4.70 per share, instead of its previous guidance of $5 to $5.20. Revenues also likely will be down 6 to 7 percent from fiscal 2012, according to Harris Corp.
In its revised guidance, Harris said the third quarter of the year appeared to be weaker than anticipated due to federal budget issues and the likely postponement of a number of international military radio orders. Its Integrated Network Solutions business also had worse-than-expected results.
The cuts are part of the fallout from the inability of Congress and the Obama administration to agree on a package that would trim the federal government’s massive deficit. The impasse triggered across-the board cuts of $85 billion in government spending, effective March 1. The rollback, known as “sequestration,” means there are fewer government deals to pursue for government contractors, such as Harris.
“Operating under a continuing resolution followed by sequestration and the related indecision surrounding how sequestration budget cuts will be implemented has delayed U.S. government procurement decisions and reduced spending,” said CEO William M. Brown in a statement. “The uncertainty is unprecedented, and the political budgetary process is progressing slowly. As a result, we are not anticipating a return to typical procurement processes before the end of our fiscal year.”
Military and emergency responder radio maker Harris RF Communications said Thursday it plans to cut a total of 150 to 180 positions from its various sites, with the layoffs to be complete in May. Harris RF employs about 2,200 locally; the company did not specify how many of those lost positions will be from its Rochester-area operations. The company also has significant regional centers in Australia, the United Arab Emirates and the United Kingdom, as well as operations in Virginia and Massachusetts.
Meanwhile, parent company Harris Corp. said it expects to spend as much as $65 million to $115 million on workforce reductions and facility consolidations between now and the end of June.
“These cost actions, in addition to our ongoing focus on operational excellence and reducing discretionary spending, show our determination to adapt to the challenging fiscal environment while continuing to invest in R&D and strategic growth initiatives,” Brown said in a statement. “The delayed international tactical radio orders continue to be solid opportunities in our pipeline. We strongly believe that the technology, innovation and affordable solutions that Harris brings to the marketplace are well-aligned with our customers’ priorities and are at the core of what will continue to make Harris a success.”
Harris issued its revisions after the market closed Thursday. By early evening, its stock had fallen 6.6 percent in after-hours trading from its closing price of $46.56.
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