Hewlett-Packard Co.
(
HPQ
) has reportedly inked a five-year information technology (
IT
) infrastructure outsourcing service agreement with a renowned
shipping company Maersk Line. The contract would bring in more than
$150.0 million for H-P.
Maersk Line, the largest company in the A.P. Moller - Maersk
Group, is the largest container shipping company in the world. Its
fleet comprises more than 500 vessels and provides the most
reliable ocean transportation services.
H-P said that it will create a private cloud computing
environment for Maersk's distributed and local applications using
its cloud computing solutions. The service is intended to reduce IT
costs and increase functionality of the company's server room. H-P
will also take care of the Service Desk function while supervising
Maersk's computing devices. As part of the agreement, H-P will
offer employment to the entire Maersk Line staff within these
areas.
We believe that H-P's success at Maersk Line could prove to be
win-win for both the companies. The shipper will be able to perform
better with more elasticity in technology infrastructure, which
will enable it to deal with competitive pressure. H-P on the other
hand could learn from the experience to win similar deals from the
shipping vertical.
H-P has cut some more service deals in the past few months.
Mortgage solutions provider Loan Value Group LLC selected H-P's
services for five years. The Australian government selected H-P's
technology service to design, build and maintain a portion of the
information, communication and technology systems of the digital
hospital.
We see H-P's service line of business is doing well. This can be
inferred from the segment's results in the latest quarter. The
Services and Financial Services segments witnessed revenue growth
of 2.0% and 18.0%, respectively.
However, the overall result was doomed due to lackluster
performance in the storage and computing segments.
We also remain cautious about the company's future growth,
particularly as competition from other big technology players, such
as
Cisco Systems Inc.
(
CSCO
),
Apple Inc.
(
AAPL
), Acer and
Dell Inc.
(
DELL
) heats up. Moreover, the expected decline in PC shipments stemming
from the hard disk drive supply cut due to the Thailand flood is
raising investor confusion over the stock.
H-P now has a short-term Sell recommendation (Zacks #4
Rank).
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