MELBOURNE, Fla. (AP) -- Defense contractor Harris Corp. is planning to lay off workers and reduce expenses to help offset the damage caused by the automatic cuts in government spending that began last month.
The austerity measures announced Thursday were triggered by a disappointing performance in Harris' latest quarter. The communications and information company, which is based in Melbourne, Fla., is bracing for the financial deterioration through at least the end of its current fiscal year ending in June.
The warning alarmed investors. Harris' stock dropped $3.04, or 6.5 percent, to $43.52 in extended trading after the bad news came out.
Management now expects its adjusted earnings for the fiscal year to range from $4.60 to $4.70 per share, down from a previous forecast of $5 to $5.20 per share. Revenue for the current fiscal year is likely to fall by 6 percent to 7 percent, worse than an earlier projection calling for a decrease of 2 percent to 4 percent.
The revised outlook translates into a revenue decline of $327 million to $328 million.
Harris hopes to reduce its annual expenses by $40 million to $50 million through the upcoming belt-tightening. The company, which employs about 15,000 workers, didn't say how many people will lose their jobs. Covering the costs of layoffs, planned office closures and other moves will result in pretax charges of $65 million to $115 million.
The cuts are part of the fallout from the inability of Congress and the Obama administration to agree on a package that would trim the federal government's massive deficit. The impasse triggered across-the board cuts of $85 billion in government spending, effective March 1. The rollback, known as "sequestration," means there are fewer government deals to pursue for government contractors, such as Harris.
"The uncertainty is unprecedented, and the political budgetary process is progressing slowly," Harris CEO William Brown said in a statement.
Based on its preliminary estimates, Harris expects report adjusted earnings of $1.12 per share on revenue of $1.2 billion. The average estimate among analyst surveyed by FactSet had projected adjusted earnings of $1.26 per share on revenue of $1.32 billion.
The company is scheduled to release and discuss its fiscal third-quarter results on April 30.