Harris Corporation (HRS) reported earnings:

Harris Corporation (NYSE: HRS) reported revenue for the third quarter of fiscal year 2007 increased 22 percent to $1.072 billion, compared to $881 million in the prior- year quarter. GAAP net income increased to $214.9 million or $1.52 per diluted share. Non-GAAP net income-excluding a significant gain and charges associated with the Harris Stratex Networks transaction, and charges associated with cost-reduction actions in the Broadcast Communications segment-increased to $100.5 million, or $.72 per diluted share, a 24 percent increase when compared to non-GAAP income in the prior-year quarter.

Analysts were expecting $0.70 on $1.07 billion in revenues. However, guidance for the remainder of the year and for next year failed to match consensus hopes:

Revised non-GAAP earnings guidance for fiscal year 2007 is a range of $2.77 to $2.81 per diluted share. The company also provided initial earnings guidance for fiscal year 2008, beginning June 30, 2007, of $3.20 to $3.30 per diluted share, representing an increase of approximately 17 percent.

“In fiscal year 2008, we expect to achieve revenue growth in a range of 10 to 15 percent, including the full-year contribution of Harris Stratex Networks,” [CEO Howard] Lance said.

Analysts were targeting revenue growth of 12.6% for 2008, along with EPS of $2.82 this year and $3.18 next. The company looks a bit short on all three counts.

The headline for the durable goods report was not very bright this morning - Durable goods orders slid 8.3 percent in Oct - Yahoo! News

New orders for U.S.-made durable goods tumbled much more than anticipated in October on a big drop in civilian aircraft but were also down unexpectedly when transportation was stripped from the total, a government report suggesting economic weakness showed on Tuesday.
Durables goods — big-ticket items expected to last three years or longer — fell 8.3 percent, the biggest drop since July 2000. The decline was propelled by a 21.7 percent fall in transportation orders, the
Commerce Department said.

But even excluding transportation orders, durables declined 1.7 percent as manufacturing, fabricated metal, and computers and electronics orders all slid.

As is our custom, however, we like to dig a little deeper into the data to determine whether there are any bright spots. Instead, what we saw for the most part was rising inventories and falling orders and shipments. All charts below are based on information provided by the U.S. Census Department and collected by Stock Market Beat.

Although last month we said it looked like it was time to play defense, even that sector is giving back much of its strength.

Also consider computers and related products. Both shipments adn orders are falling through the floor. The potential bullish case is that customers are holding off on equipment upgrades in anticipation of Microsoft (MSFT) Windows Vista. However, given the strong recent performance at Dell and Hewlett Packard (HPQ - Annual Report) this bullish case may be priced in already. That could leave investors holding a heavy bag if the Vista orders don’t come in as expected.

Communications equipment, which had formerly been bucking the trend in technology, has also seen a sharp reduction in order growth.

Semiconductors may be the bright spot, but at this point it seems too early to tell given that the one strong data point is balancing several weak ones. At the least, the strength could support the argument that slowing computer sales and orders are Vista related, and that the semiconductors will be needed to build computers in a few months.

Electrical equipment and appliances also look strong, which is probably due at least in part to strong holiday sales of flat-panel televisions.

There seem to be few places to hide.

Radio technology specialist Harris Communications (HRS) reported solid earnings and raised its full-year guidance. A review of the conference call indicates that the company is firing on all cylinders after nearly becoming a one-trick (defense) pony.

Harris started its new fiscal year with an excellent Q1. Posting outstanding revenue and earnings growth. Revenue for the Q1 was $947 million, a 25% increase compared to the prior year quarter. Organic revenue growth continued at a very strong 18%. Orders in the Q1 increased 53% to $1.1 billion significantly outpacing revenue and setting the stage for a continued growth throughout fiscal year 2007.

Government communication systems revenue was $459 million, 6% higher compared to the prior quarter as revenue increased across the department of defense, civil programs and technical services business areas.

RF communications. RF began 2007 with a very strong quarter, revenue was $264 million, an increase of 54% over the prior year.

Microwave had revenue and orders growth and strong operating performance once again in the quarter. Revenue increased to $94 million, 24% above the prior year. This is the seventh consecutive quarter that orders are been higher than sales and we continue to built order backlog.

Revenue in the broadcast communication segment was $140 million. And that’s up 59% compared to the same quarter a year ago. Revenue benefited from our prior year acquisitions of Leitch Technology, Optimal Solutions, and Aastra Digital Video. Excluding the acquisitions, revenue was about flat with the prior year.

The government communication systems and RF communications segments sell primarily to the Department of Defense, while the other two segments consist primarily of commercial customers. Back in 2000 the business was evenly split between government and commercial, but the communications bubble and 9/11 attacks shifted the mix to 80% government. Due largely to the acquisitions, the business is regaining some of its prior balance as commercial customers are back to 34% of total sales. The pending acquisition of Stratex Networks will further improve the balance.