Prepaid Cards from HP

The world’s largest personal computer manufacturer Hewlett-Packard Company (HPQ - Analyst Report) recently initiated a prefunded card service. The latest innovation provides banking clients an easy and efficient delivery solution for prefunded cards.

This will allow banks to provide card-based payment services, beyond one’s credit eligibility. This new product will help banks to meet unique market opportunities that are relevant to different organizations, agencies, and government entities. We believe that this will, in turn, increase the business potential of Hewlett-Packard, supplementing its existing revenue stream with a new channel.

The company has a strong business model, and continues to rule the computing world with the largest market share. As per a recent report published by the market research firm IDC, having shipped the highest number of units, HP emerged a winner in the PC market.

The company’s overall PC shipments increased 2.7% year over year to 92 million,during the fourth quarter. Desktop sales were, however, tempered by the demand for Apple Inc.’s (APPL) iPad, although HP also grabbed the top slot in the server segment.

HP has been missing its overly optimistic targets. While the company has been citing weakness in consumer demand as the reason, which is same as the growing popularity of Apple tablets. This apart, Europe is also not recovered sufficiently.

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 substantial improvement in the company’s consumer business in the near future, due to availability of cheaper substitutes.

The company has a short-term Hold recommendation (Zacks #3 Rank).

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