Harman's Loud Future
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.