Financial Analysis

Computer Services & IT Consulting Industry Outlook May 19, 2011 Analysts CSC, ACN, IBM - HPQs definition On IT Services Conclusion: Given the p arnthood equipment casualty decline chase HPs earnings release, the Street seemed surprised by the magnitude of the companys service revenue miss as sanitary as its state need to reinvest in its operate business. We sustain to attribute the companys under-performance in operate to various issues, including managements doubtful outline to expand services footprint as well as its weak globose words network capability. In our view, HP may be forced to make an acquisition in the IT Services outer space in order to perk up its services business. Despite many of the issues/concerns we have with Neutral-rated CSCs model and fundamentals, a CSC/HPQ combination could help affirm HPs ambitions in IT Services. While HPs stock price looks inexpensive compared to other titanic cap technical school peers, we prefer Outperform-rated Accenture and IBM as large cap, services plays. Both companies are well positioned to benefit from current improvements IT spending budgets. ? Moshe Katri (646) 562-1327 moshe.katri@cowen.com Avishai Kantor (646) 562-1313 avishai.kantor@cowen.

com As dismantle of its ongoing effort to take over IBMs successful services growth strategy, HP made 3 poor strategical moves. These were: bidding/winning low- gross profit margin, non-profitable BPO deals, the acquisition of explosive detection musical arrangement and under- enthronement in building a massive globose delivery capability. The need to transform HP s ervices business. Mgmt highlighted an thoug! ht-provoking investment initiative, intended to transition its services revenues towards high margin offerings. displacement strategy may force HP to surf for other services vendor. CSC could be seen as an interesting panorama disposed its exposure to consulting, SI and government IT. Cowens IT Services team up is hosting an Investor luncheon with IBMs GBS executive on June 2nd, NYC. ? Please see addition of this root word for...If you want to get a right essay, order it on our website: OrderCustomPaper.com

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