Market Overview

J.P. Morgan Reports CEO Transition On Harris Corporation


According to J.P. Morgan, Harris Corporation (NYSE: HRS) announced yesterday that it has begun a CEO succession process after current CEO Howard Lance announced plans to leave the position in June 2012 or when a successor has been identified.

J.P. Morgan said that we have long been concerned about the sustainability of sales in Harris' tactical radio business, the primary source of the company's profits, and we believe this latest announcement may do little to shore up confidence in the outlook for this business. “On the other hand, Lance's departure could increase the likelihood that the company will seek strategic alternatives, including a potential sale. While management has made no statement that it may be interested in selling the company, Harris has reportedly been a takeover candidate in the past and we have previously noted the potential for the company to be acquired under the right circumstances. We now re-examine the possibility of a sale given the company is in some strategic flux. We believe the potential for a sale could lead the stock to rise near-term, but since our fundamental view has if anything only been strengthened by this announcement, and we see substantial hurdles to a potential sale, we are maintaining our N rating.”

Harris Corporation closed yesterday at $48.36.


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