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Herley Industries Inc. (HRLY): Helping to Power Some of the Military’s Most Sophisticated Weapons

Herley Industries (HRLY) designs, developments, and manufactures microwave technology solutions for the defense, aerospace and medical industries on a global basis. Herley’s products include telemetry systems, command and control systems, transponders, flight termination receivers, HF communications and IFF interrogators, high-powered amplifiers, microwave integrated circuits, high/low power integrated assemblies, solid state receiver protectors, digitally-tuned oscillators and simulation equipment, as well as medical and scientific products like single modules and rack mounted amplifiers.

The company sells its products to prime defense contractors, original equipment manufacturers, research institutions, and universities in commercial markets, as well as to the United States and foreign governments. Just last week, Herley won a $2.4 million contract from the U.S. Air Force to supply radar components for the F-16 fighter jet. That comes on the heels of more than $3.5 million in contracts the Pennsylvania-based company won earlier in September. Herley, which was founded in 1965, has eight manufacturing facilities and 935 workers.

Potential investors should note that the company said earlier this month it has engaged investment bank Jefferies & Company to explore strategic alternatives, including a possible sale. Herley said there is no guarantee it will actually find a buyer for itself. The company’s main competitors include L-3 Communications Holdings Inc., the privately held CMC Electronics Inc., and Thales. For 2007, Herley had almost $149 million in sales. Roughly 64 percent of its 13.5 million shares outstanding are held by institutions. Company insiders hold almost 30 percent.

Shares of Herley closed Monday at $17.80 and have traded between $9.46 and $20.35 over the past year. The company has a market capitalization of $240.4 million. No potential suitors for the company have been mentioned as of yet and there is no time frame for a sale.

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