) long-standing ties with the gigantic FMCG (fast moving consumer
Procter & Gamble Co.
) were further strengthened with the latest information
technology (IT) service deal between the two. Yesterday, H-P
announced that it will be extending its application service
support to help P&G manage supply chain operations
efficiently. The financial details of the multi-year deal were
Per the deal, H-P will offer its Applications Development
Services and Applications Management Services. These solutions
will support P&G's mission critical business applications,
which help the company in research and development, inventory
management, enterprise resource planning and business
With H-P's application services, P&G can access its
various databases on consumer preferences, suppliers, retailers
and distributors. This will help the company to formulate more
effective product plans and refine its go-to-market strategy.
In June, P&G leveraged H-P's 3PAR storage, networking,
cloud and converged infrastructure solutions to convert its
private cloud to a hybrid cloud, which will allow greater
flexibility to cope with changing market dynamics.
The back-to-back deals prove the efficacy of H-P's services
and offerings, which enable P&G to provide constant and
uninterrupted IT services. It lends the FMCG giant greater
flexibility to cope with changing market dynamics and thus keeps
it ahead of its peers.
H-P has been dealing with the consumer goods industry for
years. No doubt the tech behemoth has gained extensive experience
in market dynamics, which has benefited its sizeable customer
base time after time. Rapid product innovation, a good
understanding of changing demands, supply chain optimization,
customer satisfaction and efficient customer feedback are
critical to survival in the fast changing consumer goods
H-P's technological innovations have given it the expertise to
take care of these key issues. Close association with P&G
could act as a catalyst to attract more deals from the
Despite consistent wins and new product launches, we have a
bearish view on H-P due to weak fundamentals as a result of
lackluster PC, Printer and Services demand.
The lack of positive catalysts resulted in significant
downward estimate revisions, on the basis of which H-P has a
Zacks #5 Rank, implying a short-term Strong Sell rating.
HEWLETT PACKARD (HPQ): Free Stock Analysis
PROCTER & GAMBL (PG): Free Stock Analysis
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