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General Motors Company (GM - Analyst Report) recently announced the signing of new multi-year project services and software contracts with Hewlett-Packard Company (HPQ - Analyst Report). This new move will enhance General Motors’ growth in IT transformation and will support the delivery of global services and products to its business partners, and reduce costs involved in the ongoing IT operations.

General Motors plans to hire up to 3,000 Hewlett-Packard employees, who are already engaged in the company’s projects, to further improve the software deployed by the company.

General Motors primarily outsources most of its IT work. But the company now plans to reverse the situation and bring innovation and development in its IT segment. The company plans to hire workers devoted to innovations rather than operations at four new technology centers in Austin, Texas, and Warren and Michigan, over the next three to five years.

General Motors, in the second quarter of 2012, registered a 41% decline in its profit to $1.49 billion or 90 cents per share from $2.52 billion or $1.54 in the corresponding quarter of 2011. Nevertheless, the earnings per share exceeded the Zacks Consensus Estimate by 15 cents.

Total revenues fell 4.5% year over year to $37.60 billion in the quarter, missing the Zacks Consensus Estimate of $37.98 billion. The decline in the profit and revenues was attributable to strengthening of the U.S. dollar against most of the major currencies as well as weak macroeconomic conditions globally, especially in Europe and South America.

Detroit, Michigan-based General Motors is the largest automobile manufacturer in the world. However, like its competitor Ford Motor Co. (F - Analyst Report), the company's significant exposure to troubled Europe has adversely affected its operations in the continent.

Currently, General Motors retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Neutral recommendation on the stock.

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