Tech major Hewlett-Packard Company (HPQ) recently announced a new solution for insurance providers. The company recently expanded its life, health and annuity policy administration systems, thereby helping insurance providers to improve agility, mitigate risk and accelerate delivery of new products.
The insurance industry is growing rapidly and this move by H-P is expected to help insurance providers expand their business to a considerable extent. The company has enhanced the RADIENCE Administration and INGENIUM systems to support the critical agility role plays in today’s Instant-On Enterprise.
HP RADIENCE Administration system enables insurers to introduce truly unique products in the market, thus enabling reduction of time frames, costs and overall project risks. Moreover, this product will help insurers to respond quickly to the market and regulatory changes by replacing costly, time-intensive reprogramming with a model-driven application that simplifies the process of changing and updating system content, appearance and behavior.
Apart from rolling out new products, the company’s CEO Leo Apotheker announced an extensive restructuring program. In order to focus more on high-growth and high-margin business, the CEO intends to spin off or sell the company’s lower-margin PC business, the webOS (still looking for a take-off) and acquire business software maker Autonomy Corp. The focus shift will likely help H-P evolve as a software and services company.
Though we believe that the three bold steps taken by the H-P chief will strengthen the company’s financial model going forward, we prefer to take a cautious stand given the company’s unimpressive third quarter 2011 results, where revenues increased a mere 1% from the year-ago quarter.
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 Cisco Systems (CSCO), Apple (AAPL), Acer, Microsoft Corp. (MSFT)and Dell Inc. (DELL) heats up.
Moreover, the separation of PSG from H-P through a spin-off or other transaction is expected to change the dynamics of the company’s business to a certain extent. This apart, the company has to come up with new strategies to counter the fierce competition in the cloud computing space.
Currently, H-P has a Zacks #5 Rank, which translates into a short-term Strong Sell recommendation.
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