Harris Corp is a diversified technology company with roughly equal interests in Communications, Semiconductors, Electronics and Office Equipment. Harris recently started a new business called Lanier Healthcare that provides information management systems to hospitals and clinics.
Harris's semiconductor product line includes many chips used by the growing telecomunications and wireless industries. Harris semiconductor pioneered the chip manufacturing process known as dielectric isolation which permits much higher analog bandwidth than common bipolar isolation. This has given Harris a lead in RF and microwave chips needed for wireless communications.
Harris is well positioned to capitalize on the introduction of digital TV as a major supplier of digital broadcast equipment. Digital TV is the most significant technology change to TV since the NTSC color TV standard was introduced more than 30 years ago. Digital TV will require a huge technology investment cycle lasting at least 5 years. This in and of itself should insure Harris a bright future.
Like GE Harris sells a lot of technology to the US government in diverse areas including avionics, air traffic control and aerospace.
Given all this why is the company selling for 15 times 1998 earnings (First Call) and less than its annual sales while GE is selling for 25 times 1998 earnings and 3 times annual sales? My answer is that Wall Street has yet to discover Harris.
Note also that First Call projects a 12% long-term growth rate for both HRS and GE yet HRS is more likely than GE to acheive a higher growth rate in the next 5 years.
The stock recently split 2 for 1 and has been in a solid uptrend since July 1996.
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