The world’s largest personal computer and server manufacturer Hewlett-Packard Co. (HPQ) announced that its security product suite will provide assistance to the U.S. Department of Health and Human Services (DHHS).
To protect its eco system from cyber-threats, the DHHS will deploy HP’s TippingPoint Intrusion Prevention System (IPS) platform. The TippingPoint IPS platform provides powerful network protection at a high speed. TippingPoint also allows improved application performance and reduces total cost of ownership across the network.
The application of HP’s IPS platform will allow DHHS to filter its network traffic, which will enable a flexible and comprehensive working environment across all its agencies. We appreciate HP’s tie-ups with federal government as it will secure a constant flow of revenue through new contract wins.
Apart from HP’s success in its security solutions, we appreciate the company’s endeavor to facilitate the healthcare industry with its innovative solutions. For example, HP recently introduced a new program to facilitate different healthcare setups. The program, known as HP EHReady, will help doctors and different hospitals to store the health records of patients over the electronic media.
Recently, the federal government granted around $19.0 billion in incentives to medical practitioners and hospitals for buying and using electronic record keeping software. We believe HP is well positioned to benefit from the announcement.
HP’s second-quarter earnings exceeded the Zacks Consensus Estimate, with revenues continuing on an upward trend. HP expects revenues to remain stable in the third quarter and during fiscal 2010.
Although we remain positive about the company’s performance going forward given an improvement in demand and a leadership position in the PC segment, we believe competition from other big technology companies, such as Cisco Systems Inc. (CSCO), Apple Inc. (AAPL), Microsoft Corp. (MSFT), Dell Inc. (DELL), as well as smaller Asian players is building up.
Hence, we maintain our long-term Neutral rating on the stock, with a short-term Zacks #2 Rank (Buy).
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