HP clinches top services deal worth $ 1.5 b

PALO ALTO, Calif: Hewlett-Packard Co., the No. 1 computer hardware maker, has said that it has signed its largest services deal ever, a $1.5 billion contract to manage technology for Canadian Imperial Bank of Commerce (CIBC).

The 7-year deal, won without a competition against other suppliers, comes in a slow market for technology and represents one of the biggest endorsements of HP since its controversial acquisition of Compaq Computer Corp in May. This merger made HP the No. 3 global technology services provider, and a stronger contender against technology services leader International Business Machines Corp.

HP had a prior relationship with CIBC and won the outsourcing deal without having to face off against competitors, which CIBC said meant a cheaper and faster decision-making process and good terms for the contract.

In a related deal, HP will buy CIBC's stake in a joint technology services venture, INTRIA-HP, for undisclosed terms. Shares of HP rose 5 cents, less than 1 percent, to $13.70 on the New York Stock Exchange, compared with a slight dip in the wider market.

HP's services division and its leading printing division are the profit centers of the new company, which is working to make its low- and high-end computer hardware divisions profitable. Many companies see outsourcing deals with strict performance criteria as a way to cut costs and focus on their own businesses by turning management of technology resources to experts.

Services chief and Executive Vice President Ann Livermore said in a conference call the deal was worth more than C$2 billion, or about $1.5 billion. "This is the biggest deal that we have ever signed," she said.

© Reuters