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Hewlett-Packard Business PC, Workstations to be Used by USAF

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Hewlett-Packard (HPQ - Free Report) will provide business PCs and workstations to the United States Air Force (USAF) under the Quantum Enterprise Buy (QEB) procurement program.

The business desktop and notebook PC models that will be dispatched to the USAF include HP Z230 Workstation, HP Compaq Pro 6305 SFF, HP ProBook 640 G1 and HP ZBook Mobile Workstations.

It is worth mentioning that in the last-reported quarter, Hewlett Packard’s revenues from the Personal Systems segment increased 7.4% year over year to $8.17 billion, primarily due to a 12% increase in commercial revenues, which more than offset a 2% decline in revenues from the consumer segment. The company also witnessed a 10% year-over-year increase in unit shipments.

Revenues from notebooks were up 7% year over year, while unit sales increased 6% from the year-ago quarter. Desktop revenues increased 8% from the year-ago quarter, while units sold were up 6% on a year-over-year basis. Growth in commercial revenues was driven by robust performance of its commercial desktops and notebooks.

The current contract bodes well for the company as having federal government departments as major customers lends stability to the segment and moderates fluctuations in revenues. Although government agencies generally have a lengthy approval process, once approved, these projects contribute to the top line for a number of years.

In addition, government contracts improve the visibility of future revenue streams. Furthermore, Hewlett-Packard’s technology and flagship products are being used by various departments of the federal government.

Moving on, Hewlett-Packard’s traction in the cloud, security and Big Data segments are positives. The company’s strategic focus on the software business will help it to achieve long-term profitability. Moreover, restructuring initiatives to rationalize costs are expected to improve the company’s profitability in the long run.

However, continuing macroeconomic challenges, tepid IT spending and competition from International Business Machines (IBM - Free Report) and Oracle (ORCL - Free Report) are near-term headwinds.

Currently, Hewlett-Packard has a Zacks Rank #3 (Hold). Investors can also consider NVIDIA Corp (NVDA - Free Report) , which has a Zacks Rank #1 (Strong Buy).

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