H-P, Rolls-Royce in 5-Year Deal

Hewlett-Packard Co. (HPQ - Analyst Report) recently announced that it will provide its enterprise services to Rolls-Royce plc as per a five-year deal signed by the two companies. Financial details of the deal were kept confidential.

U.K.-based Rolls-Royce is engaged in developing power systems and allied services targeting the civil aerospace, defence aerospace, marine and energy and nuclear markets. To manage all these businesses under a single information technology (IT) infrastructure could become really tough without proper data center support.

Per the deal, H-P will streamline and simplify the IT ecosystem for Rolls-Royce. For this purpose, H-P’s data centers located in the U.K., the United States and Singapore will host Rolls-Royce’s IT applications.

In order to help Rolls-Royce in managing its businesses more efficiently, H-P will also support its server and storage environments remotely placed in France, Brazil, Germany, Canada and Norway. With all the support from H-P, the power system maker would be able to serve its customers in a better way and reduce operating costs.

H-P’s IT infrastructure portfolio has been a consistent performer and this has prompted Rolls-Royce to opt for its services. The success of the venture with Rolls-Royce would help begin another long-standing relationship, which could prove to be significant for H-P.

Last month, IT infrastructure services provider vBridge opted for H-P’s Converged Storage solution to increase its data center capacity to meet the growing demand for cloud services.

Though continuous deal wins are encouraging, slowing profitability, lackluster PC demand, uncertainty over new product ramps, new product roll outs from Dell Inc. (DELL - Analyst Report) and overall macro uncertainty keep us on the sidelines.

Currently, H-P has a Zacks #3 Rank, implying a short-term Hold rating.