Hewlett-Packard Company (HPQ) clinched a four-year services deal with the U.S. Special Operations Command (SOCOM), marking its third government deal this month.
The deal has been valued at $68.1 million. Under the terms, HP’s Enterprise Services unit will offer data center management support services to SOCOM.
The U.S. SOCOM is a part of the Department of Defense and is charged with the responsibility of supervising various Special Operations Commands (SOC) of the Army, Air Force, Navy and Marine Corps. The SOCs are targeted at special operations forces/fighters, specially trained to perform high-risk dangerous missions across the world that conventional units/forces cannot perform.
HP’s services will help the U.S. SOCOM to consolidate its global enterprise information technology (IT) server and storage computing operations, enabling the special operations forces to better communicate with their headquarters during any mission. The data center consolidation services will also bring about a reduction in cost and complexities related to mission-critical data access and security.
HP has been serving government verticals for a long time. The gamut of deals gives the leading PC vendor a wide exposure to this space. Earlier this month, HP signed a 5-year deal with the health care division of Nevada Department of Health and Human Services for a sum of $176.0 million. Moreover, HP’s IT support services were selected by the Corporation for National and Community Services (CNCS). The deal, valued at $22.5 million, had a one-year base period with four one-year extension options.
We think that HP’s association with USSOCOM will bolster its position in the data center market, facilitating the wave of consolidations now taking place in the space, although individual deal values have not been that significant so far.
Though we are encouraged by HP’s lead position in both PC and Server segments, the intense competition from other big technology companies, such as Cisco Systems Inc. (CSCO), Apple Inc. (AAPL), Microsoft Corp. (MSFT), as well as smaller Asian players is worth keeping in mind.
Currently, HP has a Zacks #3 Rank, which translates into a short-term Hold recommendation.
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