This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Harman's Loud Future

Stocks in this article: HAR MSFT

NEW YORK ( TheStreet) -- Harman International's (HAR) strong earnings and recent contract wins may lead to better days for the audio equipment maker.

On Friday, Harman announced non-GAAP earnings of 67 cents per share -- up 100% from the same period last year -- on $1.09 billion of revenue, during the fourth-quarter of 2012. The company reported non-GAAP earnings of $2.93 on $4.4 billion of revenue for the fiscal year. Shares gained 7.46% on the back of the solid earnings report on Friday.

Harman's technologies support navigation and multimedia connectivity for automobiles (infotainment), branded audio for the car, the home and "on the go," as well as professional recording and broadcasting. Investors not only celebrated the company's strong earnings growth, but recent contract wins in the infotainment division.

JPMorgan analyst Ryan Brinkman highlighted "good news on the backlog front," including the $900 million infotainment systems contract win with General Motors (GM); the new "Uconnect" program with Chrysler; and the fact that embedded infotainment systems now "serve as software integrators for various active safety features," in his note to clients on Monday. Brinkman maintained his "overweight" rating of the stock and $60 price target.

Harman's backlog of automotive business reached $16.6 billion in 2012. The 10% increase from 2011 is partially attributed to the first-time contract with the world's largest auto-maker.

CEO Dinesh Paliwal said in an interview with TheStreet on Friday that the contract with GM has a five-year life-cycle, but is "likely to grow." The Harman system will replace Japanese competitive offerings currently in GM cars, "which are at least one generation if not two generations behind" in technology, according to Paliwal. "We carry the latest technology," he said.

Harman also highlighted the latest infotainment system for Chrysler, called Uconnect Access, available in the 2013 model Ram 1500 pickup truck and 2013 SRT Viper. The technology enables drivers to connect to any cellular network in the U.S. without a smartphone in the car. The voice-command recognition feature allows drivers to dial hands free, listen and dictate text messages and conduct searches on Microsoft's (MSFT) Bing, so drivers "can keep their eyes on the road and hands on the wheel," Paliwal told TheStreet.

Citing Chrysler' head of Uconnect Systems and Services, Marios Zenios, Paliwal said the system includes "all things that one could dream of."

Harman is uniquely positioned to capitalize on its "strong star power," the CEO said. Artists such as Paul McCartney, Kanye West, JLo, Maroon 5, Tim McGraw, who have used Harman technologies in their recording studios for years, are partnering with the Stamford, Conn.-based company to build the company's brand awareness.

"Customers are more likely to buy the same branded audio experience for their home and for their car," said Paliwal of building brand loyalty. Auto-makers BMW and Daimler are already benefiting from these star-studded campaigns, according to Paliwal.

The company affirmed its prior target for fiscal 2013 on a constant-currency basis; however due to the weak euro, Harman now expects next year's earnings to be between $3.67 and $3.92 per share on revenue between $4.3 billion and $4.6 billion, below its forecast from last October.

Credit Suisse analyst Christopher Ceraso noted Harman did not change its production forecast. Ceraso expressed concern about Harman's midpoints of its segment operating profit forecasts, which "translate to EPS below the guidance range," in a research note on Monday. Ceraso maintained his "neutral" rating of the stock and $62 price target.

Harman shares fell in early Monday trade, off 2.06% to $44.74. The stock is up 17.46% year-to-date.

--Written by Nathalie Pierrepont in New York.

>To submit a news tip, send an email to:

Check out our new tech blog, Tech Trends. Follow TheStreet Tech on your wireless devices.

>Contact by Email.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs