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H-P Wins $56M Defense Contract

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Hewlett-Packard (HPQ) will provide IT support and services to the Defense Manpower Data Center (:DMDC) of the U.S. Department of Defense (DoD). The company will also provide its IT expertise to support the Defense Information System for Security (:DISS).

The DoD contract spans over 3 years and is valued at $56 million. Per the contract, H-P’s Enterprise services will manage and enhance the DoD’s four Personnel Security and Assurance systems — Joint Personnel Adjudication System (:JPAS), Defense Central Index of Investigations, Investigative Records Repository and the Secure Web Fingerprint Transmission.

These systems provide personnel security management for DoD employees, DoD contractors, military personnel and civilians. Moreover, H-P will provide data security and services for the DoD’s Joint Verification System (:JVS) and help in the migration of data from JPAS to JVS efficiently. Moreover, these enhancements help DoD to reduce costs and manage and procure data in a fast and effective manner.

H-P’s IT services are being deployed by several public sector departments. However, H-P’s Enterprise services segment has been affected by lower IT spending in the U.S. and U.K. In the last-reported quarter, revenues from this segment were down approximately 9%.

Although the company has maintained that deal renewals continue, new deals seem to be have been impacted by tepid IT spending from the private and public sectors alike. However, the company’s renewed focus on strengthening its cloud, big-data and apps portfolio should help it to secure new deals, going forward.

Nonetheless, H-P is still reeling under pressure from the declining PC business and broad-based revenue declines from its other revenue-generating segments. The company has also hinted at muted revenue growth in 2014.

Moreover, other consulting and IT companies, such as Accenture Plc. (ACN), International Business Machines (IBM) and Cognizant Technologies (CTSH) might make it difficult for H-P to gain market share in the cloud and analytical segment.

Currently, H-P has a Zacks Rank #3 (Hold).

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