A unit of the world’s largest computer maker, Hewlett-Packard Company (HPQ: 45.17 -0.31 -0.68%) has won a mammoth deal of providing support to the U.S. Navy information technology department, having a total value of $3.4 billion. HP Enterprises’ former Electronic Data Systems (EDS: 6.79 +0.18 +2.72%) is the beneficiary of this deal.HP has been initially awarded work valuing $27.0 million which may be completed by Sep 30. The initial work order will involve activities such as providing support and maintenance to the Navy/Marine Corps Intranet, which is expected to provide service to more than 7,00,000 navy, sailors, marine and civilians. Taking into account all aspects of the deal, the full deal is expected to be completed by July 2015.
This is one of the major deal wins by the tech major in recent times. Moreover, the company is extending its enterprise systems management leadership position into the application, service management and business process management markets. It also believes that the digital content being developed will create a $1.2 trillion addressable market opportunity. HP has announced five growth priorities, which include Sales Coverage, Emerging Markets, Digital Printing, Mobile Computing and Next-Generation Data Center.
This apart, the company entered into a three-year contract with Avaya Inc. As per this agreement, HP’s product line will incorporate certain Avaya business communication products. With the Avaya deal, HP intends to offer customers an attractive bundle consisting of hardware and software from Avaya and its own proprietary UCS management services. Interestingly, Microsoft Corp. (MSFT: 24.21 -0.1995 -0.82%) is a software partner for both HP and Cisco’s UCS.
HP has also deployed additional sales resources to capture incremental opportunities in the enterprise and mid-markets. The company has a diverse global customer base along with a broad product portfolio that is aligned to the growth areas of the market. We believe HP will continue to grow its top-line and bottom-line along with new product additions.
HP’s second quarter EPS exceeded the Zacks Consensus Estimate and revenues continued to experience an upward trend, showing substantial improvement. The company expects revenue to remain in line in the third quarter, and during the fiscal year 2010. The company is through with the acquisition of networking major 3Com, and will now be able to challenge networking leader Cisco Systems.Although we remain positive on the company’s performance going forward given the improving demand and the company leadership position in the PC segment, we are not very confident about a substantial improvement in the company’s Printing business, due to availability of cheaper substitutes.
We maintain our Neutral rating on the stock.
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