Melbourne, Florida-based Harris Corp. (NYSE: HRS – $104.16) reported fiscal second quarter revenue of $1.7 billion compared with $1.75 billion last year. This missed the $1.76 billion consensus. Earnings per share were $1.42 for the period compared to $1.47 last year, but beat the $1.38 Street estimate by $0.09. Communication Systems segment revenue in the second quarter was down 16% compared with the prior year. Space and Intelligence Systems segment revenue was up 5%, primarily driven by higher revenue from intelligence community customers. Electronic Systems and Critical Networks revenue was higher by 1% and 2%, respectively.
The company provided guidance of revenue for the full year at $5.76 billion – $5.88 billion and full-year earnings of $5.40-$5.60 per share, below the Street consensus of $5.79. Comparable figures are difficult. Beginning with the second quarter of fiscal 2017, CapRock’s current and prior period financial results are reported as discontinued operations. In connection with Harris’ recently announced agreement to sell its government IT services business, current and prior period financial results for this segment will be reported as discontinued operations beginning in the third quarter of fiscal 2017.
Following the close of the quarter, the Harris board approved a new $1.0 billion share repurchase authorization. This new program is in addition to the remaining unused authorization of $584 million under the company’s existing repurchase program. The company now expects fiscal 2017 share repurchases to total $700 million. Long-term earnings projections may well be lifted once the government’s new military spending policies become clearer. In the meantime, the shares, yielding 2%, can be held in a well-diversified aggressive account.