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Harris Corp. (NYSE: HRS) has had a nice run. Over the past five years, the stock price has gone from $14 to $59.

The company is a key player in communications and IT – with about 7,000 engineers and scientists. With the spread of terrorism and the wars in Iraq and Afghanistan, the company's skill sets are certainly "must haves."

But, trends do come to an end (especially in the defense industry). That may be the thinking with the folks at Harris. That is, according to a report in the Wall Street Journal (subscription only), it looks like the company is shopping itself for a potential sale.

I doubt they will have much trouble finding suitors. After all, the sector is full of major operators looking to bulk things up, such as Raytheon (NYSE: RTN), BAE Systems PLC (NASDAQ: BAESY) and Northrop Grumman (NYSE: NOC).

Moreover, the fundamentals still are intact at Harris. According to its Q1 report, revenues increased from $1.07 billion to $1.33 billion. Net income came to $108 million, or $0.78 per share.

So far in today's trading, the shares of Harris are up about 9%.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Teledyne Technologies (NYSE: TDY) manufactures sophisticated electronic components, instruments and communications products. These include defense electronics, data acquisition and communications equipment for airlines and business aircraft; monitoring and control instruments for industrial and environmental applications; and subsystems for wireless and satellite communications. The firm also provides systems engineering and information technology services for defense and space applications; manufactures general aviation and missile engines; and makes on-site gas and power generation systems. Clients include Boeing (NYSE: BA), NASA and the U.S. Air Force. Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC) and Raytheon (NYSE: RTN) are competitors.

The company pleased investors last week, when it announced Q1 EPS of 77 cents and revenues of $451.8 million. Analysts had been looking for 66 cents and $424.6 million. The CEO noted that it was the twenty-fifth consecutive quarter of year-over-year earnings growth. Management also guided Q2 EPS to 72-74 cents (74 cent consensus) and FY08 EPS to $2.98-$3.06 ($2.93 consensus).

John McCain is famous for many things. One of those is the McCain-Feingold Act designed to limit the role of corporate money in politics. But his actions suggest an eagerness to accept corporate money as a means to his political ends.

Here are three:

• Protects campaign contributor from S&L regulators costing government billions. In the 1980s, McCain intervened to keep regulators away from Charles Keating, a Savings & Loan operator, who contributed to McCain's campaign and let McCain's wife co-invest in a real estate deal. Keating's Lincoln Savings and Loan ultimately failed, costing taxpayers $3.4 billion.
• Sways $100 billion U.S. Air Force contract to European company. In February the Air Force awarded a $100 billion contract for refueling Tankers to EADS, the parent of Airbus, and Northrop Grumman (NYSE: NOC). As I posted, McCain's campaign finance chair was a lobbyist for EADS who arranged to send much of this contract to non-U.S. workers. McCain now employs the people who lobbied for EADS on his own staff. EADS retained The Loeffler Group to lobby for the tanker deal in 2007. Loeffler Group lobbyists on the project included Tom Loeffler, who lobbies for EADS and serves as McCain's national finance chairman and Susan Nelson, who left Loeffler and is now the campaign's finance director. EADS employees donated $14,000 to McCain's presidential campaign, more than any other member of Congress this election cycle; and

MOST NOTEWORTHY: Northrop Grumman, Phase Forward and Celestica were today's noteworthy upgrades:

• Cowen upgraded Northrop Grumman (NYSE: NOC) to Outperform from Neutral following the Q1 report based on accelerating growth. Shares were also upgraded at JP Morgan to Overweight from Neutral.
  
• Friedman Billings upgraded Phase Forward (NASDAQ: PFWD) to Outperform from Market Perform following the solid Q1 report and views guidance as beatable.
  
• CIBC raised Celestica (NYSE: CLS) to Sector Outperformer from Sector Performer following Q1 results, citing end markets that look stable.

OTHER UPGRADES:

• JP Morgan upgraded the Consumer Discretionary Sector to Overweight from Underweight.
  
• Wendy's (NYSE: WEN) was raised to Neutral from Sell at Goldman.
  
• Progenics Pharmaceuticals (NASDAQ: PGNX) was upgraded at Citigroup to Hold from Sell.
  
• Merrill Lynch raised Wal-Mart (NYSE: WMT) to Buy from Neutral.

Bear Strearns has downgraded Ford (NYSE: F) to "underperform" from "peer perform," according to MarketWatch.

Lehman Bros. has started Lowe's (NYSE: LOW) at "outperform," according to the AP.

Credit Suisse upgraded Aetna (NYSE: AET) from "underperform" to "neutral," according to Briefing.com. The news service also reports that JP Morgan upgraded Northrop Grumman (NYSE: NOC) to "overweight" from "neutral."

Douglas A. McIntyre is an editor at 247wallst.com.

Despite excellent earnings from Boeing Co. (NYSE: BA) yesterday, a bit of a shadow still hangs over the company. That's because in February the Air Force awarded a $100 billion contract for in-flight refueling craft -- known as tankers -- to EADS's Airbus and Northrop Grumman (NYSE: NOC). Boeing is currently challenging this award. But an interview I did for my book on Boeing suggests that Boeing will not win this contract because George W. Bush and John McCain want to award the contract to Bush's new friends: France's Nicolas Sarkozy and Germany's Angela Merkel.

I got this theory from a veteran Wall Street analyst who covers the aircraft industry. He suggested that Boeing lost the Tanker bid because John McCain -- who is ranking member on the Senate Armed Services Committee -- had the Air Force change the specifications for the tanker bid so Airbus and Northrop would be able to field a competitive bid. My source noted that the one problem with the change was that the Air Force did not inform Boeing about it.

After the bid was awarded to Airbus, it became clear that the original specifications had changed from a small, 767-sized craft to a medium-sized 777 one. During the review process, my source contends that Boeing asked the Air Force if the 767-sized craft was what it wanted. Boeing also told the Air Force that it would be happy to bid with a different model if the Air Force wanted. But the Air Force told Boeing that it still wanted the 767-sized craft.

Boeing Co. (NYSE: BA) gets a mixed report card this morning. Its earnings were up 38% in the first quarter but it lost a $3.74 billion deal to Northrop Grumman (NYSE: NOC). The Wall Street Journal [subscription required] reports that Boeing earned $1.62 in the first quarter, beating analysts' estimates by 27 cents a share. But Bloomberg News reports that Boeing lost another contest with Northrop -- this time for a spy plane, specifically a drone.

First, the good news for Boeing. The Journal reports that its net income of $1.21 billion, or $1.62 a share, increased 43% from $877 million, or $1.13 a share, a year earlier, while its revenue climbed 4.1% to $15.99 billion. Also important, Boeing reiterated its boosted guidance for earnings of $5.70 to $5.85 a share on $67 billion to $68 billion in revenue. Analysts' latest mean estimates were $5.93 and $68.95 billion, respectively. Even better, it raised its earnings projections for 2009 to between $6.80 and $7 a share on strong production-program performance and declining research-and-development and pension expenses. Analysts were expecting $6.87.

Now, the bad news. Northrop's Global Hawk drone beat Boeing's aircraft for the 68 plane order, after in February, Boeing already lost an Air Force competition for refueling tankers. Northrop, which had never built a refueling aircraft, faced a Boeing team that supplied the Air Force for more than half a century. Northrop won that $35 billion program by offering a larger jet with more fuel capacity than Boeing. Is Boeing's lack of competitive vigor on the defense side a sign of deeper management problems?

Investors don't seem concerned. Boeing stock is up over 2% in early trading.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He is writing a book about Boeing and has no financial interest in the securities mentioned.

LaBarge (AMEX: LB) designs, engineers and manufactures electronic, electro-mechanical and interconnect systems for the broad industrial market. The firm's printed circuit boards, cables and electronic assemblies are used primarily in military communication systems, commercial aircraft, satellites and oil drilling equipment. Customers include Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC) and Schlumberger (NYSE: SLB).

The company pleased investors last month, when it guided fiscal Q3 EPS to 23-24 cents and Q3 revenues to $70-$72 million. The Street had been expecting 21 cents and $65.47 million. Management also predicted that Q4 results will be at least as strong as those achieved in Q3.

Boeing (NYSE: BA) is thumping its chest about the likelihood that it can get Congress to reverse a deal giving a $35 billion military tanker contract to Northrop Grumman (NYSE:NOC) and EADS, the parent of Airbus.

According to Reuters Mark McGraw, a company vice president, said he was "as confident as I can be" that congressional auditors would find fault with the U.S. Air Force's February 29 choice of the rival team. Brave words, especially when the Air Force claims that the Boeing proposal lost on every key metric for building the tanker.

Boeing is counting on members of Congress who don't want American jobs to go overseas to push back on a contract which includes Europe-based EADS. But, it may not be that simple.

The Wall Street Journal reports that "Government contracting documents show that the U.S. Air Force preferred the size and capability of aerial refueling tankers" being offered by EADS and Northrop. The EADS Airbus 330 can carry more fuel that its Boeing competition.

Boeing is almost certainly wasting its time. No matter how much some Congressmen would like to save jobs for their districts, they cannot be seen as favoring a deal which is probably substantially inferior.

Douglas A. McIntyre is an editor at 247wallst.com.

The Associated Press reports that John "Freedom Fries" McCain employs former lobbyists for EADS, the parent of Toulouse, France-based Airbus, on his staff. EADS and Northrop Grumman (NYSE: NOC) recently won a $100 billion contract to build refueling tankers for the Air Force, edging out Boeing Inc. (NYSE: BA) which has filed a protest.

McCain now employs the people who lobbied for EADS on his own staff. According to the AP report, EADS retained The Loeffler Group to lobby for the tanker deal in 2007. Loeffler Group lobbyists on the project included Tom Loeffler, who lobbies for EADS and serves as McCain's national finance chairman; Susan Nelson, who left Loeffler and is now the campaign's finance director; and former Secretary of the Navy William Ball III, who has campaigned for McCain.

EADS also had a long-term relationship with Ogilvy Government Relations, formerly known as the Federalist Group. Ogilvy lobbyist John Green, who records show worked on the EADS account, recently took a leave of absence to volunteer for McCain as the campaign's congressional liaison.

MAJOR PAPERS:

• What Countrywide Financial Corporation (NYSE: CFC) knew about its mortgage borrowers, and how it handled that information, is under review by Federal investigators, according to the Wall Street Journal. Some of their findings reveal that Countrywide had questionable information, which it then put together many of those mortgages into securities, and sold them to investors.
• The Air Force's award of a $40B contract for aerial refueling tankers to Northrop Grumman Corporation (NYSE: NOC) and European Aeronautical Defense & Space, will be protested by The Boeing Company (NYSE: BA), reported the Wall Street Journal.
• The Financial Times reported that News Corporation (NYSE: NWS) CEO Rupert Murdoch dashed the hopes of Yahoo! Inc (NASDAQ: YHOO) executives seeking an alternative to Microsoft Corporation's (NASDAQ: MSFT) $40B offer after Murdoch endorsed the view of analysts and investors that it could not match the value offered by Microsoft.

OTHER PAPERS:

• According to General Motors Corporation (NYSE: GM) president and COO Frederick A. Henderson, the New York Times reported that the auto maker will not intervene in the dispute between parts supplier American Axle and Manufacturing Holdings Inc (NYSE: AXL) and the United Auto Workers union. Given that the strike has not yet hurt the company's ability to sell vehicles, Henderson said company officials "just have to keep to our own knitting."

The New York Times reports that one reason Boeing Co. (NYSE: BA) may have lost the $100 billion contract to build tankers -- in-flight refueling aircraft -- for the Air Force because the winners -- Boeing's arch-rival, EADS, parent of Toulouse, France-based Airbus and Northrop Grumman (NYSE: NOC) -- took a big risk to demonstrate their commitment to the project.

Specifically, EADS/Northrop made a $100 million bet -- by building a state-of-the-art refueling boom that would funnel the fuel from the tanker to the fighter aircraft in the air -- with no assurance that it would win the contract. Meanwhile, analyst Loren Thompson said that Boeing seemed arrogant and offered a plan that Air Force officials thought would deliver only 19 tankers by 2013 compared with 49 by EADS/Northrop. Thompson even accused Boeing of being unresponsive and impolite.

Much remains up in the air. EADS/Northrop claims its tanker can carry more fuel than Boeing's modified Boeing 767. EADS/Northrop believes its bid also offered more flexibility for carrying cargo, transporting troops, airlifting refugees and delivering humanitarian aid. And there's a dispute about how many U.S. jobs will be created by each. Boeing said its bid would create or support 44,000 American jobs. EADS/Northrop's figure was 25,000 jobs in 49 states.

Boeing may decide to appeal this contract award. Then the General Accounting Office (GAO) will have 100 days to rule on the appeal. Meanwhile, the Air Force claims it bought the better plane.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned and is working on a book on Boeing.

Boeing Co. (NYSE: BA) and Airbus go toe to tor for almost very major commercial airline contract in the world. They haul each other into court over international trade practice questions. For pure blood sport, the competition can hardly be matched.

Over the course of the last week, the battle between the two companies moved up a notch as the Air Force gave a $35 billion tanker program to Northrop Grumman Corp. (NYSE: NOC) and EADS, the parent of Airbus. Members of Congress may try to keep the deal with Boeing, and the issue should be messy for several months.

While Boeing and Airbus beat the living daylights out of one another, China is planning to begin to build its own large commercial aircraft. China is one of the biggest markets for the two airplane company leaders, and as the need of big jets there increases, the Asian company was going to be a meal ticket that might last for decades.

Things are not going as planned. According to The Wall Street Journal (subscription required), "China has confirmed plans to set up a company to make large passenger airplanes." The paper also writes that Boeing thinks China will need over 3,300 new jets by 2026.

China could be making its own planes by then, leaving Boeing and Airbus to bicker over military contracts.

Douglas A. McIntyre is an editor at 247wallst.com.

As he stumps for President, Senator John McCain likes to brag about how he kept Boeing Inc. (NYSE: BA) from winning a contract to build Tankers -- in-flight refueling aircraft -- for the Air Force in 2004. Last week, the Air Force announced that the winner of the contract was Boeing's arch-rival, EADS, parent of Airbus which is based in Toulouse, France and Northrop Grumman (NYSE: NOC).

That decision is sitting very well with the governor of Alabama, where Northrop Grumman is based. Republic Governor Bob Riley endorsed McCain a mere three days after the Air Force contract was announced. The EADS-Northrop tanker, based on the Airbus A330, will be built in Mobile, AL, where The Associated Press reports it will produce 2,000 new jobs, and support 25,000 jobs at suppliers nationwide.

Is it just a coincidence that Riley endorsed McCain so soon after that contract was awarded? Boeing supporters in Congress may be wondering and they are angry with McCain "for scuttling an earlier deal that would have let Boeing build the next generation of Air Force refueling tankers." AP reports that Boeing now will miss out on a deal that it says would have supported 44,000 new and existing jobs at the company and suppliers in 40 states.

BusinessWeek reports that Boeing Inc.'s (NYSE: BA) loss to Northrop Grumman (NYSE: NOC) and EADS for the $100 billion contract for Air Force tankers -- aircraft that refuel fighter craft while they're in the air -- was a no-brainer from the Air Force's perspective.

BusinessWeek quotes Loren Thompson, a Lexington Institute defense analyst, who concluded that "Northrop Grumman's victory was not a close outcome." Here are two reasons he cited:

• Northrop offered more bang for the buck. While both Boeing and Northrop Grumman satisfied requirements established by the Air Force, Northrop was clearly the better buy. With Northrop, the military could have "49 superior tankers operating by 2013," Thompson said, while Boeing's proposal would give it "only 19 considerably less capable planes" by then.
• Boeing's Tankers did not perform as well as Northrop's. "Boeing didn't manage to beat Northrop in a single measure of merit" -- not in flight range, fuel capacity, speed of delivery, or cost. "Boeing would have to find a lot of problems to overturn this outcome," Thompson told BusinessWeek. The Northrop tanker carriers 250,000 pounds of fuel, compared to 202,000 on Boeing's, a crucial difference considering that refueling tankers must often circle for many hours when military operations require.

I'm writing a book about Boeing and if Thompson is right, the loss raises questions about Boeing's competitive vigor. Not winning this $100 billion deal is obviously not a help for its stock either.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.