Hewlett-Packard Company (HPQ) recently announced that the U.S. Air Force (USAF) will deploy its Workstations and Desktop PCs. Financial terms of the deal were not disclosed.
The latest deal emerges from an enterprise information technology purchase program conducted by the USAF. This isn’t, however, the first tie-up between the tech giant and the Air Force. For the past 5 years, the USAF has deployed 900,000 units of HP’s products.
Under the recent deal, HP will provide USAF with Z800 and Z400 Workstations. Both Workstations feature Intel Corp.’s (INTC) processors and high speed storage, as well as NVIDIA Corp.’s (NVDA) graphic cards. These Z series Workstations are energy efficient and high-performance devices compatible in any environment. HP will also offer Compaq 6005 Pro Business desktop PCs. The hardware, software and firmware security offered by this PC model will meet USAF’s technological requirements.
For as many as 60 years, different departments of the federal government have relied on HP’s technological inventions and flagship products. This dependence has made it a key player in the PC and services sector. As a result, according to the U.S. industry research firm IDC, HP is leading the desktop and mobile workstation market.
In another recent development, HP also announced that a Dallas-based residential mortgage originator, PrimeLending will deploy its TippingPoint solution. The solution will secure 25 servers that are used to host a number of virtualized machines.
Despite the company’s market position and compelling product line, we remain cautious about its future growth, particularly as competition from other big technology players, such as Cisco Systems Inc. (CSCO), Apple Inc. (AAPL), Acer and Dell intensifies.
Moreover, the separation of the Personal Systems Group (PC business) from HP or any other transaction could change the dynamics of the company’s business. This apart, the company has to constantly come up with new strategies to counter competition in the cloud computing space.
The news of the company’s PC business spin-off has compelled analysts to lower their estimates. As a result, HP now has a short-term Strong Sell recommendation (Zacks #5 Rank).
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