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H-P Secures US Army Contract - Analyst Blog

Posted
3/26/2013 6:27:00 PM
By: Zacks.com
Referenced Stocks:ACN;CRM;HPQ;IBM

After a series of new deal wins, Hewlett-Packard Company ( HPQ ) has yet again successfully managed to grab a couple of new deals. The Enterprise Service division of HP announced that it has been awarded two task orders by the U.S. Army Human Resources Command (AHRC).

According to the agreement, the company will be instrumental in improving the technology infrastructure and applications platform used in the recruitment process.

Generally, U.S. Army Information Technology Enterprise Solutions contracts are sold under 2 Services agreements, which include 30.0% participation from small-businesses. As per the terms of the first contract, HP has secured a  three-year order from AHRC to continue managing its technology infrastructure, which will provide necessary support for the U.S. Army Cadet Command and Army Recruiting Command.

HP's association with AHRC spans over the last 20 years, which started with providing data centre services to AHRC including Workplace Services. Moreover, the company provided field support for PCs, laptops and printers used by AHRC staff along with Networking Services and enterprise architecture planning from HP Transformation Consulting Services.

The company's new business wins and deal renewals are making things easy. The process is also being aided by HP's current restructuring initiatives.

The money generated through this process will be mainly reinvested in the business to foster innovation, particularly in cloud, Big Data analytics, information management, security and software segments. Although the cloud offers plenty of opportunities, Hewlett-Packard is facing tough competition in this segment from Salesforce.com ( CRM ), IBM ( IBM ) and Accenture Plc . ( ACN ).

HP's growth in the core computing market has been restricted by the unfavorable impact of macroeconomic factors, as well as the sluggish market. This apart, the printer business continues to look challenging. The company is taking major steps to expand and initiate growth as well as improve its balance sheet.

Hewlett-Packard is not getting any support from its PC business. The market for new PCs has not seen any major growth in the last couple of years. The increasing competition from small and medium companies is likely to further hurt its growth . However, HP's growing focus on new business segments, such as electronic medical records, cloud computing, Enterprise solution and now analytics will help the company grow in the coming quarters.

Currently, Hewlett-Packard carries a Zacks Rank #1 (Strong Buy).



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