HP secure US Air Force deal despite spin-off talk

Hewlett-Packard have secured a new deal to supply the US Air Force, even though they are considering spinning off or selling their Personal Systems Group.

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Hewlett-Packard have secured a new deal to supply the US Air Force, even though they are considering spinning off or selling the HP Personal Systems Group.

HP announced on Monday that the Air Force has selected it to provide some new workstations, including the HP Z800, which uses Xeon processors, up to 192GB of ECC memory and as much as 10 terabytes of storage.

Lasting relationship

Last year the Air Force approved a five-year purchase agreement with HP that could be worth up to $800 million. The agreement, which was revealed on Monday but signed July 1, allows the Air Force to purchase specific products under purchase agreement, including its latest workstations.

HP has been a longtime vendor to the Air Force, and says it has bought over 900,000 units of its various products in the last five years.

Possible sell-off

Earlier this month HP announced it was exploring "a full or partial separation" of its Personal Systems Group, either through a spin-off or "other transaction." HP recently killed off its Touchpad tablet after poor sales.

The company has been speaking to customers about its plans for the Personal Systems Group, reaching out to customers "to ensure them of our commitment and support," HP spokesman Frank Bauch said. "We absolutely stand by our products and the Air Force can continue to buy with confidence."

Ray Bjorklund, an analyst at FedSources, said he didn't see HP's spin-off plans as having much impact on government buying decisions. He said the government has experience in navigating industry shifts, much like it did when HP bought Compaq.

"There is continuity here," Bjorklund said. "It's not like this becomes a radical upset of the whole selling channels."

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