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H-P to Serve U.S Immigration Agency

Zacks Equity Research

Hewlett-Packard Co.’s (HPQ) Enterprise Services unit was recently chosen by the U.S. Department of Homeland Security Department to provide call-center support for its U.S. Citizenship and Immigration Services (‘USCIS’) arm. The 5-year task order will boost H-P’s cash balance by $220.5 million.

Per the contract, H-P will manage the entire task of developing a call center platform, starting from recruiting and training personnel, setting up questionnaires (expected queries from prospective immigrants) and jotting down probable and satisfactory answers for the queries. For these services, H-P will implement its Customer Engagement Management Services.

H-P will also provide complete hardware support for the call centers. The hardware will include ProLiant DL380 Generation 7 servers, MSR30-20 routers, 5500-48G-PoE EI switches, ProBook 6560b notebook PCs powered by Intel Corp.’s (INTC) processors and LaserJet M9040 multifunction printers.

H-P’s services will enable the U.S. immigration agency to serve new immigrants better and faster.

Earlier this year, H-P managed to retain a federal contract worth $543.0 million despite IBM Corp.’s (IBM) protest.

Back in June 2012, a contract was announced by the federal agency Department of Veterans Affairs. 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, considered to be the most competent one, 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. Also, the continuous deal wins from the federal sector are encouraging, but the lower margins associated with the deals cap profitability.

Though further indication of PC market slump in 2013, declining revenues and competition from Dell Inc. (DELL) are concerns, back-to-back product launches and growing exposure into enterprise storage space are encouraging.

Currently, H-P has a Zacks Rank #2 (Buy).

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