Hewlett-Packard Company (HPQ) to Invest $1 Billion in its Enterprise Services Business

Hewlett-Packard Company (HPQ) to Invest $1 Billion in its Enterprise Services Business

Hewlett-Packard Company (NYSE: HPQ) today announced that it will make an investment of $1 billion to launch a new generation of its Enterprise Services Business. The transformation will enable the Palo Alto, California-based Hewlett-Packard to enhance client experience and also improve service delivery.

The company plans to invest in fully automated, standardized, state-of-the-art commercial data centers, which will be built on its Converged Infrastructure and operated by its management software. Using its own IT Transformation experience, the company will allow clients to shift their applications to the modernized infrastructure platforms, which will allow them to run their businesses in a faster and more efficient manner.

Commenting on the modernization plan, Tom Lannotti, HP Enterprise Services� senior vice president and general manager, said that the company has focused on integrating EDS and improving profitability in the last 20 months. Lannotti said that with the integration now complete, the company has identified significant opportunities to grow and scale the business.

The idea behind the new initiative is to enhance client experience and also position Enterprise Services business for growth. Due to the productivity gains and automation from the new initiative, the company expects to shed 9,000 jobs over the next few years.

In order to fund the new initiative, the company will take a charge of $1 billion over the next few years, which will be included in its GAAP financial results. On completion of the transformation, the company is expecting annual gross savings of around $1 billion and net savings of $500-$700 million.

Shares of Hewlett-Packard Company were up in today�s trading. The stock reached a high of $46.57 in trading. At last check, it was up 0.22% to $46.11, with volume at 12.21 million.

The HP stock has a 52-week range of $33.85-$54.75. Currently, it is trading below its 50-day and 200-day moving averages. The stock has seen support at around $45.49 and resistance at around $46.80.

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