Jan 29 - L3Harris Technologies reported fourth-quarter revenue that fell short of analyst estimates, as delays stemming from a prolonged U.S. government shutdown and broader trade pressures hindered contract activity and supplier dynamics.
The company said total revenue for the quarter was $5.65 billion, a 2% increase from the prior year but below the Wall Street consensus of $5.78 billion, based on LSEG-compiled estimates. Shares of the defense contractor moved lower in premarket trading in New York, down about 5%.
L3Harris identified its space systems business as a principal area of weakness during the quarter. Management pointed to softer volumes in a classified intelligence and cyber program as contributing factors. In October, the company had noted that the shutdown also slowed international export license processing and delayed cash collections.
Within its communications segment, the company reported mixed results. Sales of civil communication products declined in the fourth quarter, partially offset by gains tied to electronic warfare work in its communications systems business.
The root of much of the disruption was the U.S. government shutdown, the longest in the country’s history at 43 days, which ended in November. According to the company, the extended lapse in appropriations stalled procurement actions across the military, reducing the pace of contract awards and affecting defense suppliers including L3Harris.
Trade-related headwinds also remain a concern. L3Harris said contractors across the defense sector have been affected by pressures tied to tariffs and trade measures, which have strained an already stressed supply chain. The company cited a recent disclosure from a larger peer that tariff impacts had reduced that company’s results by $600 million in 2025.
For 2026, L3Harris issued revenue guidance in a range of $23 billion to $23.5 billion, which is roughly consistent with analysts’ expectations of $23.33 billion. The company noted that its outlook currently includes the financial results of its space technology business, in which L3Harris sold a 60% stake to AE Industrial Partners in January. That transaction is expected to close in the second half of 2026, after which L3Harris will refresh its guidance - a move the company said could put pressure on reported revenue.
Earlier this month, L3Harris also disclosed a first-of-its-kind partnership with the Department of War, under which the department invested $1 billion in the company’s rocket motor business. The firm acknowledged that the government’s equity stake raises a potential conflict of interest, since the Pentagon would hold ownership in a firm that competes for major defense contracts.
Market context and company posture
L3Harris is navigating a confluence of operational disruptions - delayed procurement rounds tied to the extended government shutdown, program-specific volume softness in classified work, and tariff-related supply-chain pressure that has affected cash flow and costs. The company’s near-term guidance reflects those headwinds while leaving room for an updated outlook following the planned close of the space technology stake sale.