Bloomberg News reports that Harris Corp. (NYSE: HRS) denied rumors that it is seeking a takeover. The stock is down 16% on that announcement. However, Harris did say that it has received expressions of interest.
This shows how treacherous it can be to invest in takeover rumors. I reported on such a rumor on May 16. Between that report and Friday, Harris stock rose 6% from $62 to $65.78. But with this morning's denial of takeover rumors, that entire gain is lost -- and more. A look at Harris's stock chart suggests that I was late to the party.
The interesting thing about the denial is that it comes in the wake of reports that Harris had received offers that valued the company at $10 billion -- or $74 a share -- which is less than the $75 to $85 a share it expected. It looks like Harris could be playing a game to encourage a higher bid. I'll keep watching.
Today was an odd day, and despite the mixed index levels it should be considered a win. Oil rose sharply and was over $127.00 at one point after the Saudi's said that demand didn't justify increasing production in oil; Goldman Sachs put oil's average target for the second half of 2008 above $140/barrel. To top it off, the controversial University of Michigan consumer confidence level came in at the lowest reading since 1980. Even housing saw strange information as the rise in building permits and housing starts came out much higher than expected: so much for house prices stabilizing.
DJIA 12,983.13 (-9.53; -0.07%) S&P500 1,425.06 (+1.49; +0.10%) NASDAQ 2,528.79 (-4.94; -0.19%) 10 Yr Bond 3.850% (+0.007%) 52-week lows TOP 10 ANALYST CALLS
Ascent Solar Technologies, Inc. (NASDAQ: ASTI) saw a drop-off after it priced a 3.8 million share secondary offering at $14.00, well under yesterday's close. In the final minutes, shares were down 6% at $14.93.
Radio World reported that Harris Corp. (NYSE: HRS) might sell itself. I just spoke with an analyst who said that there's a rumor that the suitor might be military contractor General Dynamics (NYSE: GD).
Harris is based in Melbourne, Fla., and has a market capitalization of $7.3 billion. Perhaps Harris thinks its growth potential in the defense industry is "less attractive" than anytime since Sept. 11, 2001. Harris has 16,000 employees and reported $5.1 billion in revenues and net income of $410 million over the last 12 months, ending March 28, 2008.
General Dynamics may be able to cut costs and increase revenues by combining the two firms. And Harris stock is clearly rising -- it's up 2.8%. Could it be due to this rumor? Please comment if you know more.
Harris (NYSE: HRS), an electronics and defense company, is recently trading at $60.22 in pre-open trading, above its close of $54.41 Thursday.
The Wall Street Journal reported HRS has begun exploring its strategic options, and could eventually choose to sell itself, according to people familiar with the matter.
HRS overall option implied volatility of 30 is below its 26-week average of 34 according to Track Data, suggesting decreasing price risk.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
The Wall Street Journal reported that, in an attempt to toughen its regulation standards, SEC chairman Christopher Cox said earlier this week the agency would push Wall Street investment houses will have to reduce borrowing and rely less on short-term financing.
As part of plans to reduce costs and restore profit growth, people close to the situation said that Citigroup Incorporated (NYSE: C) is likely to today identify up to $400B in non-core assets that could be sold. Additionally, the Financial Times reported that Citigroup CEO Vikram Pandit will confirm his pledge to cut the bank's cost base by about 20% at a meeting with analysts today. Sources familiar with the matter believe Pandit will dismiss calls for a break-up of the company.
MOST NOTEWORTHY: WSP Holdings, Harris and XTO Energy were today's noteworthy initiations:
Oppenheimer believes WSP Holdings (NYSE: WH) is benefiting from rapid growth in the oil and gas exploration market and a move toward deeper and harsher environment drilling. The firm has an Outperform rating and $9.50 target on the stock.
UBS assumed Harris (NYSE: HRS) with a Buy rating and $63 target, as they see upside to the company's FY09 estimates driven by RF Communications. UBS views the recent pullback as a buying opportunity.
Morgan Keegan is positive on XTO Energy's (NYSE: XTO) projected 20% production growth, value building through acquisitions, and valuation; shares were initiated with an Outperform rating.
OTHER INITIATIONS:
Goldman started Philip Morris (NYSE: PM) with a Buy rating and $60 target.
Harris Corporation (NYSE: HRS) is an international communications and information technology company serving government and commercial markets in more than 150 countries. The firm offers information networks, reconnaissance solutions, RF communications systems, air traffic control systems, commercial broadcast hardware, and wireless transmission networking products. The company's largest customer is the US government. It's commercial client list includes Clear Channel Communications (NYSE: CCU), Sony (NYSE: SNE) and Lockheed Martin (NYSE: LMT).
The firm surprised the Street last week, when it announced fiscal Q2 EPS of 87 cents and revenues of $1.32 billion. Analysts had been expecting 81 cents and $1.25 billion. Management also guided FY08 EPS to $3.45-$3.55 ($3.43 consensus) and FY08 revenues to $5.2-$5.3 billion ($5.16B consensus). The CEO attributed the favorable outlook largely to increasing strength in the company's RF communications tactical radio business. CL King subsequently initiated coverage of the issue with a "strong buy" rating and a $72 price target.
If technology sector operations combined with stable government contact work sounds like an appealing play, you're not the only one to reach that conclusion.
Harris Corporation (NYSE: HRS) develops communications products/solutions for government and commercial customers.
Harris' manufactures satellite, microwave, and wireless network transmission equipment, air traffic control systems, mobile radio systems, and digital network broadcasting and management systems. The U.S. Government is Harris' largest customer.
"Defense companies are in a growth market of the highest order," says Gregg Early in Personal Finance. But rather than buy industry giants, he suggest looking at lower-tier companies that are "either primed for the big leagues or will be acquired by a first- or second-tier company for a big premium in coming years."
One such play is Harris Corp. (NYSE: HRS), which Early notes represents the globalization of the defense industry. According to the advisor, "Special forces in Afghanistan, army units in Iraq and astronauts rely on Harris equipment."
Now, he says, Harris is making a move into Eastern Europe. He explains, "Because these nations are small and need to be unified on a communications level, the company will have myriad contracts with new nations for years to come. Harris Corp is a buy below 56."
Also a global play, the advisor looks to Israel-based Elbit Systems (NASDAQ: ESLT). He notes, "It's difficult to overstate the breadth of the company's client list. From India to the US to Saudi Arabia, everyone has a contract with this diversified defense conglomerate."
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"Defense companies are in a growth market of the highest order," says Gregg Early in 
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