Finally Some Good News for H-P - Analyst Blog

By Zacks | January 02, 2013 AAA

Despite the tumultuous situation surrounding the Autonomy issue (H-P's Autonomy Buy: A Blame Game), the PC giant Hewlett-Packard Co. (HPQ) ended the year on a positive note. The company (aka H-P) retained a federal contract worth $543.0 million despite IBM's (IBM) protest. The contract was held back for evaluation issues, reports Bloomberg.

Back in June, a contract was announced by the Department of Veterans Affairs (VA). The 5-year wireless tracking contract required the 90 competing companies to provide a technology to reduce the number of lost equipment, monitor sterilization of medical devices and identify patients receiving recalled products.

H-P was initially awarded the contract. In response, IBM challenged the agency's decision and its evaluation process before the U.S. Government Accountability Office (GAO), the agency to resolve contract disputes.

The GAO held the Department of VA guilty of not evaluating the proposal properly and ordered a re-run of the selection process.

The re-evaluation process turned out to be positive for H-P as the agency found H-P's technological support to be the most competent.

A win against IBM and the federal agency's continued reliance on its services is certainly a reason to cheer for H-P. But the pending decision regarding the authenticity of accounting irregularities in Autonomy's financials (before the acquisition deal) and declining revenue trend (owing to soft PC market and strained IT spending) is keeping the tech giant under pressure.

Currently, H-P has a Zacks #3 Rank (Hold). Its archrivals Dell Inc. (DELL) and IBM also have a Zacks #3 Rank (Hold).

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