For Immediate Release
Chicago, IL – August 04, 2010 – Zacks.com Analyst Blog features: Hewlett-Packard Co. (HPQ), Accenture (ACN), Microsoft Corp. (MSFT), Cisco Systems (CSCO) and Apple (AAPL ).
Here are highlights from Tuesday’s Analyst Blog:
H-P Settles DOJ Litigation
As per the latest disclosure made by the world’s largest computer maker, Hewlett-Packard Co. (HPQ), the tech major has agreed to settle a lawsuit in principle imposed against it by the U.S. Department Of Justice (DOJ).
The government body has previously accused Hewlett-Packard and other tech giants of paying illegal consideration to Accenture (ACN) for securing endorsements for government orders.
Although H-P has denied its involvement in the case, it expects that the settlement will result in an outflow of $50.0 million, which is expected to lower its third quarter profit by 2 cents per share.
This lawsuit dates back to the year 2007, when Microsoft Corp. (MSFT) first initiated it, and the DOJ and others formed a combined lawsuit against the three tech majors, namely H-P, Sun Microsystems and Accenture.
These companies were accused of forming an illegal cartel for securing government contracts. This lawsuit should have just a trivial impact on the reputation of the company, and we believe that the current achievements of the company will make up for it.
As per the latest findings of the market research firm IDC, global PC shipments in the second quarter 2010 inched up to 22.4% year over year, while another research firm, Gartner, calculated the growth to be 20.7%. The findings of IDC also confirms the fact that market leader Hewlett-Packard retained the first position worldwide, with an 18.1% market share, which declined marginally by 1.6% as a result of lower international sales.
It seems that while all tech companies are reaping the benefits of improved macroeconomic fundamentals across the globe, the maximum benefit has been tapped by H-P. As per a recent report published by Gartner, H-P also grabbed the leading position in the server market during the first quarter of 2010.
Although we remain positive about the company’s performance going forward given that the demand has been improving, we believe competition from other big technology companies, such as Cisco Systems (CSCO) and Apple (AAPL ), as well as smaller Asian players, will continue to intensify.
On the other hand, we also believe that the tech giant will come out of this legal development against it, keeping its reputation unscathed.
We currently have a short-term Zacks #3 Rank (Hold) rating on Hewlett-Packard.
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