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H-P's Bond with Asian Airlines Grows

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Hewlett-Packard Co. (HPQ) recently announced that its Enterprise Services unit will provide information technology (IT) support to a Chinese aviation technology provider TravelSky Technology Ltd. TravelSky provides IT solutions to the country’s airlines, airports, air travel suppliers, travel agencies, individual and corporate travel consumers, and cargo services. Financial terms of the deal were not divulged.

Per the deal terms, H-P will help TravelSky in developing a Passenger Services System (:PSS), which will be known as “New Compass”. A PSS helps airlines to manage their reservation system (i.e. selling of seats), flight details, seat availability and check-in process.

H-P will provide the design for the PSS system and support TravelSky in the development and delivery of the ‘New Compass” to its clients located in 300 cities in China and 80 other cities worldwide. With the ‘New Compass” PSS system, the served airlines, airports and travel agencies can access flexible and scalable solutions for improved passenger experience.

In a separate development, H-P announced a success story with Japan’s largest airline, All Nippon Airways. The airline adopted H-P Autonomy’s ‘Optimost’ marketing optimization software and ‘TeamSite” web-content management system. Leveraging H-P’s services, the airline witnessed 30.0% growth in its online ticket sales. This has improved All Nippon Airways’ annual revenues.

A report published by International Air Transport Association shows a modest improvement in the financial performance of the industry in 2013, with solid contribution from the Asian-Pacific carriers. Specifically, these carriers are expected to record a profit of $4.2 billion in 2013, much more than $3.9 billion recorded in 2012.

Considering the Asian airline industry growth, we believe H-P success as well as expertise in the field of aviation could prove beneficial for H-P’s growth in the region.

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

Currently, H-P has a Zacks Rank #2 (Buy). Other technology stocks that warrant a consideration are SanDisk Corp. (SNDK) and Synopsys Inc. (SNPS).

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