HP Wins Government Deal - Analyst Blog

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The U.S. Government departments have started making fresh investments in technology. A case in point would be a $41.0 million deal win by Hewlett-Packard Company ( HPQ ) from the State of Minnesota Department of Public Safety (DPS). DPS signed a system-integration contract with HP Enterprise Services to develop Driver and Vehicle Services Division's Minnesota Licensing and Registration System.

According to the agreement, the technology company will work with DPS to standardize the process and help to develop a system for storing data for 6.4 million vehicle records and 4.1 million driver history records.

The user-centric Minnesota Licensing and Registration System (MNLARS) will enable communication among 40,000 users, including law enforcement agencies, DVS business partners, court systems and federal agencies to help deliver real-time access to verified data. This process will help them to streamline the whole registration and licensing process.

Although public and private enterprises have reduced their IT spending budget, HP is seeing a steady flow of new business.

Although the company is winning deals at regular intervals, HP is seeing certain internal headwinds. These include issues such as macroeconomic concerns affecting the renewal of orders, as companies are looking for paperless offices, so printing habits are slowly changing having a negative impact on the printing business of the company.

Moreover, weaker pricing in the service business coupled with tough competition and softer-than-expected demand in the PC market could also affect its revenues.

Recently, the company took some major restructuring initiatives and innovative steps to manage costs, drive growth and improve the health of its balance sheet.

On the other hand, the printer business remains particularly challenging as competitors such as Lexmark ( LXK ) and Canon ( CAJ ) are regularly coming up with new products. In addition, the growing availability of low-cost refilling options for toners and cartridges poses a threat for HP. Also, margins in the services business are likely to remain weak this year and the macroeconomic trends continue to work against it.

Presently, the company holds a Zacks #3 Rank (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: CAJ , DPS , HPQ , LXK

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