The world’s largest computer maker Hewlett-Packard Company (HPQ) and Royal Dutch Shell (RDS.A) have jointly developed an inertial sensing technology, which will record seismic data at low frequencies.
The new system is designed to provide a better understanding about the earth’s subsurface, thereby enhancing chances of locating oil and gas reserves to satisfy the ever-increasing energy needs.
This is one of the new ventures by the company in the sensor technology segment, which is expected to generate more demand among the larger players in the oil and gas sector. The U.S. Energy Information Administration projects a further increase in crude oil prices in 2012, with the refiner acquisition cost for crude oil averaging $106 per barrel. This will lead to more exploration, thereby generating the need to deploy the aforementioned product.
The latest venture also marks one of the most significant endeavors by HP in the area of wireless computing. It is expected to improve the quality and accuracy of seismic information collected by organizations for oil and gas location studies.
We remain positive on the company’s performance going forward, given its leadership position in the PC and Server segments. But we are not very confident about a substantial improvement in the company’s consumer business in the near future, due to the availability of cheaper substitutes.
Moreover, HP has been missing its overly optimistic targets, citing weakness in consumer demand as the reason. This apart, Europe is still to show sufficient recovery.
The company has a short-term Hold recommendation (Zacks #3 Rank).
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report
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