(PC) Hewlett-Packard Wins Contract from LeaseWeb

The world’s largest personal computer (PC) maker, Hewlett-Packard Company (HPQ) has recently won a business deal from one of Europe’s largest Internet hosting providers, LeaseWeb. As per the terms of the agreement, the largest PC maker is expected to implement HP ProLiant server technology in its data centers in the Netherlands, Germany and Belgium, as well as at its newest facility in Virginia.

The company has been in news over the last couple of days, for restructuring its management team, to improve operational efficiency. Leading the series of important events was the departure of Chief Administrative Officer, Pete Bocian. Moreover, the company also announced the departure CIO Randy Mott. The company’s search for a suitable successor is still on.

As per the latest contract entered into by HP with LeaseWeb, the former will deliver new servers, which is expected to increase performance and capacity to support rapid business growth. This will help to enhance LeaseWeb global network of eight data centers. The company offers high-quality hosting, cloud solutions and Internet services to customers across the globe, priding itself on an uptime of 99.99%.

Hewlett-Packard is currently on a roll as it continues to win several deals and contracts. Recently, the company secured a 10-year outsourcing contract worth $380.0 million from Healthways Inc. As per the terms of the agreement, the PC maker will provide applications development solutions and IT management services to Healthways. The deal is expected to strengthen the relationship between the companies and help them pursue new opportunities in the government and commercial markets.

The company’s growth story remains intact given its track record of new deal wins and acquisitions. The company recently signed a deal to acquire Printelligent, a closely held provider of managed print services (MPS) for an undisclosed sum.

Moreover, HP’s acquisition of Printelligent is a part of the company’s strategy to optimize the traditional technology environment that its customers depend on and deliver a connected world between the customer and the enterprise.

It seems that the company is undergoing significant structural changes given its longer lead time and services selling and lengthy revenue recognition cycle. We are expecting a change in the process during fiscal 2012.

Despite the company’s market position and compelling product line, we remain cautious about future growth, especially as competition from other big technology players, such as Apple Inc. (AAPL), Acer, Microsoft Corp (MSFT), and Dell Inc (DELL) heats up. The increasing competition is expected to impact pricing in the market, thus moderating profitability to some extent.

However, a lowered revenue outlook, reflecting moderate demand for desktop PCs, manufacturing problems in Japan and the growing popularity of tablets, which is eating into its core computing market are headwinds for the stock. Moreover, HP lags its peer Apple in the tablet vertical.

Currently, Hewlett Packard has a Zacks #4 Rank, implying a short-term Sell rating.

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