The Zacks Analyst Blog Highlights: Hewlett-Packard, Wipro, Amazon.com, International Business Machines and Luminex

Zacks


For Immediate Release

Chicago, IL – August 13, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Hewlett-Packard Company (HPQ), Wipro Ltd. (WIT), Amazon.com Inc. (AMZN), International Business Machines Corporation (IBM) and Luminex Corporation (LMNX).

 

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Here are highlights from Friday’s Analyst Blog:

Restructuring Affects H-P's Guidance

Hewlett-Packard Companys (HPQ) current CEO Meg Whitman is keen on improving the company’s profitability by way of initiating a number of restructuring programs.

 

The company is shuffling its top management in an effort to restructure its low-margin Enterprise Services segment. Hewlett-Packard declared that Mike Nefkens, services executive in Europe, is replacing the enterprise services head John Visentin on an acting basis. Enterprise services’ Chief Financial Officer Jean-Jacques Charhon is being appointed as the unit’s chief operating officer.

 

H-P also decided to write down the enterprise-services business by $8.0 billion. The write-down is in relation with the acquisition of Electronic Data Systems Corp., which was acquired by H-P for $13.2 billion in 2008, when Mark Hurd was at the helm.

 

Following the acquisition, Hewlett-Packard was compelled to enter into low-margin information-technology outsourcing business, which is actually the forte of Wipro Ltd. (WIT) and Tata Consultancy Services Ltd. (:TCS). However, Hewlett-Packard realized after the takeover that Electronic Data Systems did not have enough technical depth for a smooth transmission into cloud computing. Eventually, the company failed to deliver efficient services that help clients provide software over the Internet.

 

Moreover, the company upped its projection for pretax charge from $1.0 billion to a range of $1.5 billion - $1.7 billion related to a job cut announced in May. The CEO announced to lay off 27,000 employees by the end of fiscal 2014, which includes most of the employees from the Enterprise Services unit.

 

The company expects the accounting adjustments to generate a loss of $4.31 to $4.49 per share that comes to around $8.5 billion to $8.9 billion, which will be the biggest quarterly loss HP has suffered in its 73-year history. Over the last 15 years, this would be the second time that HP will incur loss in a quarter.

 

Hewlett-Packard is a leader in today’s technology-driven world, and apart from cloud computing, the company has earmarked the enterprise storage space as one of the most enviable growth areas. We believe that H-P is doing very well in this category.

 

H-P looks to make its cloud computing services public within two months. H-P's cloud services will be somewhat similar to the cloud platform offered by Amazon.com Inc.’s (AMZN) Web Services.

 

H-P’s cloud infrastructure is also popular among its customers. But its software- as-a-service offering may take some time to ramp up, as it will be first used by the existing customers. On the other hand, the economic turmoil, lackluster PC demand and Meg Whitman’s yet-to-be-proven strategies keep us on the sidelines.

 

International Business Machines Corporation (IBM) is one of H-P’s peers. Currently, H-P has a Zacks #3 Rank, implying a short-term Hold recommendation.



Lumina Wins DTRA Contract

Luminex Corporation (LMNX), a developer of biological testing technologies, recently announced that the Defense Threat Reduction Agency (“DTRA”) has awarded the company with $11.6 million to develop a portable diagnostic device enabled with quick detection of bio-threat agents. The contract has a term period of more than three and a half years.

 

The contract with Luminex supports The Chemical and Biological Defense Initiative Fund (“CMB-DIAGB2”) of the U.S. Department of Defense's DTRA.  The DTRA was setup in 1998 to cater to the Department of Defense’s core technical, intellectual and operational support expertise to identify and negate threats from weapons of mass destruction and explosives.

 

The deal with DTRA is in line with Luminex’s business strategy to penetrate the applied markets such as bio-defense and bio-threat testing. Management at Luminex is enthused about its alliance with DTRA to provide cutting-edge solutions to neutralize biothreat agents and enhance civilian safety with its advanced technologies.

 

This field deployable hand-held tool will identify both protein and nucleic acid targets to detect Systemic Inflammatory Response Syndrome (“SIRS”), a disease caused by blood infection from bio-warfare, combats and more. Bio-warfare agents can cause a variety of diseases which can affect multiple organs and can lead to large scale fatal illnesses to military and civilians as well. However, the symptoms of bloodstream infections are common and hence, a diagnostic test needs to be developed to detect bio-warfare pathogens.

 

Luminex already possesses an extensive product portfolio and a strong pipeline of novel assays, which are expected to support growth going forward. Earlier in April 2012, the company had announced its decision to expand its Biodefense Group by investing in scientific research to further build on its product line.The DTRA’s award will further boost Luminex’s bio-threat detection technology program.

 

 

 

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Read the analyst report on HPQ

Read the analyst report on WIT

Read the analyst report on AMZN

Read the analyst report on IBM

Read the analyst report on LMNX

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