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Expanded IT Services Resources and Reach Strengthen HP's Business with More Than 100 Companies Worldwide


HP (NYSE: HPQ) today announced that the merged company's strengthened position in IT services contributed to the combined company's ability to maintain market momentum and drive customer wins in the months prior to the merger. Services-led contracts in the recent three-month period totaled more than $1.5 billion, illustrating a key go-to-market strength for the new HP going forward.

"The dynamics of the IT market have changed dramatically. Advances in technology -- whether faster processors, bandwidth expansion or storage improvements -- result in increased service requirements," said Ann Livermore, executive vice president, HP Services. "In today's changing marketplace, we often see services as the key driver for technology implementation.

"HP offers the industry's most complete array of IT products and services for both businesses and consumers, with a commitment to serving customers with open systems and architectures," said Livermore.

HP also announced contracts with Johnson Controls, Inc., Reed Elsevier plc and a BellSouth unit that together total over $150 million in new business.

Under a five-year agreement with Johnson Controls valued at $96 million, HP assumes responsibility for management of the company's desktop and notebook computing environment in the United States and Canada. HP will provide software-related services to Reed Elsevier under a three-year agreement valued between $40 million and $60 million. Also, HP entered a multi-million dollar services agreement with a unit of BellSouth.

Services Provide Competitive Advantages

Services capabilities proved to be a key differentiator in closing more than 100 new contracts -- each valued at more than $1 million, several valued at more than $100 million -- in just the last three months. These contracts demonstrate HP's ability to deliver integrated, comprehensive solutions with the services capabilities needed to speed implementation and deliver greater value to the customer more quickly.

The 100-plus new contracts include companies and governmental agencies from Asia to Argentina, from Canada to China and across the U.S. and Europe. Under the contracts, HP will provide an array of services to companies including American Reprographics, Centennial College in Toronto, the U.S. Department of Veterans Affairs, Houston ISD, Kimberly-Clark, Medical College of Wisconsin, Sharp HealthCare, Unilever Latin America and Walt Disney Internet Group. Other examples of new services-driven business include:

PeopleSoft selected HP to provide technical operations, IT infrastructure and services needed to expand PeopleSoft eCenter globally to deliver hosted solutions for the company's customers worldwide. Also, PeopleSoft selected desktop PC systems from HP as the company standard.

European Aeronautic Defense and Space Co. (EADS) recently entered a five-year managed services contract with HP. Under the agreement, valued at more than $85 million, HP will manage EADS's IT operations including maintenance and further development of applications and infrastructure.

Los Angeles-based Dunn-Edwards, a maker of premium paints and coatings, recently selected HP to deliver a comprehensive set of products and management and consulting services to implement an enterprise-wide enterprise resource planning solution.

Compaq Brazil recently provided Unilever Latin America with services, AlphaServers, industry-standard servers and storage that make up the infrastructure for its SAP platform. HP Services will deliver a complete portfolio of help desk call-center and onsite services managed by a central executive office and two call centers in Brazil and México. HP will serve as the single point of problem resolution for more than 14,000 Unilever users in 22 countries in Latin America.

"Unilever has few IT strategic partners that can meet their overall needs in Latin America. The merger of HP and Compaq will allow Unilever more value, choices and options. When combined with the services arm of Compaq, the new HP is in a position to provide a complete infrastructure service offering for Unilever at a very competitive price," said Fred Baumer, vice president, Unilever Latin America. "Compaq had the ability to bridge the gap between technology and an intimate understanding of Unilever's infrastructure business processes that create real value. We are looking forward to strengthening this relationship with the new HP."

Leadership Requirements

According to Airton Gimenes, vice president of sales, HP Services, there are several key criteria any company must have to compete in services: global reach, robust financial and leasing capabilities, strong technology and innovative research and development, highly skilled people and strong relationships with key IT leaders such as Microsoft and Oracle. "The simple fact is that HP has great strength in all these areas which are so essential to delivering world-class services to customers around the world," said Gimenes.

HP Services is undertaking a significant systems integration project for the Ministry of Hajj in the Kingdom of Saudi Arabia. (The Hajj -- an obligatory, once-in-a-lifetime pilgrimage to Makkah -- is one of the five pillars of Islam.) The Ministry accommodates over 2 million Muslim visitors during the month of Hajj each year and an additional 2-3 million visitors for Umrah, an optional lesser pilgrimage, throughout the year. HP is working with partners Cisco and Tibco to build the Ministry a highly available, secured infrastructure to improve Umrah services. The project will create a business-to-business portal to share business-critical information among the Umrah travel industry, the Ministry and other government entities and Royal Saudi embassies worldwide.

French tire manufacturer Michelin selected HP to manage all of its IT support calls in Latin America. The HP solution includes help desk outsourcing, service desk, software distribution and equipment inventory management. HP's services provide streamlined resolution of problems for Michelin's users.

Telkomsel is the largest general service merchandise operator in Indonesia. HP is providing business recovery services valued at $2.5 million for 5 years and maintenance services for Telkomsel's data warehouse valued at $1.2 million.

Volkswagen Bank in Germany has leveraged a three-year, $3.9 million operating lease from HP services to procure desktop and notebook PCs, printers, installation and support.

Renewal of services deals, such as one with Boeing for more than $7 million, also shows HP's commitment to its customers and is an example of HP's high customer loyalty ratings.

Blue Cross Blue Shield of Michigan (BCBSM) -- the largest nonprofit, single-state Blue Cross Blue Shield plan in the United States with nearly 4.8 million members -- made a decision to be more efficient and focus on its core competencies. HP provides custom enterprise help desk support, onsite desk side software support, remedial maintenance and asset management services at locations statewide. BCBSM also recently signed a multi-million dollar, three-year contract for desktop PCs, portables and monitors with HP instead of IBM, the incumbent supplier, and Dell.

HP's strength in IT services is demonstrated by the combined company's tremendous worldwide breadth and depth with nearly 65,000 experienced professionals in IT consulting, outsourcing and support deployed in approximately 160 countries. HP receives millions of service requests per year with 75 percent resolved within one hour and 92 percent resolved the same day. Based on the last four reported fiscal quarters of its predecessor companies, the new HP will have annual services revenues on the order of $15 billion.

HP's World-class Services Delivery -- Stand-alone or as Part of Integrated Solutions

Under a previously announced $95 million services agreement with GE Aircraft Engines, HP is providing extensive services and infrastructure outsourcing in both North and South America. Earlier, a major win with Bank of America was driven by the company's ability to provide services and will include the installation of 120,000 PCs, 6,000 industry-standard servers and 4,000 professional workstations during a multi-year contract.

SASOL Germany recently signed a $5.3 million, multi-year agreement for HP to provide outsourcing services for its complete IT infrastructure. In their Latin American operations, pharmaceutical giant Eli Lilly has signed a two-year agreement with HP for managed services to provide help desk services and a Windows® 2000 migration.

Major communications companies around the world rely on services provided by HP, including Nokia -- the world leader in mobile communications. The agreement with Nokia represents one of the largest recent services deals with HP providing professional services worth a total of about $260 million. Additionally, global telecommunications leader Ericsson recently entered a managed services agreement worth more than $200 million.

Deutsche Telekom and Lucent Technologies in Singapore also recently signed new contracts with HP. In addition, the telecommunications company in China's Szechwan province entered an agreement with HP worth more than $100 million. Portugal Telecom selected HP Services to migrate nearly 11,000 seats from Novell to a Microsoft® platform based on 100 industry-standard servers.

Services under a new contract with Vodafone UK Limited call for HP to integrate its TeMIP telecommunications software into Vodafone's digital cellular radio network supporting 12.8 million customers. In a separate $10 million, three-year deal, HP will handle outsourcing for Vodafone Australia/New Zealand.

Comgás (São Paulo Gas Company), a major energy supplier in Brazil, selected HP to provide outsourcing services for the company's SAP environment. The HP solution includes server hosting, operating system administration and management, and database and SAP/R3 Basis backup administration. According to Comgás, the new SAP infrastructure has enabled the company to achieve a higher volume of management information in a faster and more secure way and has transformed Comgás into a more streamlined company.

Also, Walt Disney Internet Group is in a three-year contract with HP for professional services to outsource PC and server infrastructure. The companies are in the second year of an agreement -- valued in aggregate at more than $100 million -- that names HP as the preferred technology provider to the Walt Disney Internet Group.

About HP Services

HP Services -- the $15 billion services arm of HP -- provides consulting and system integration, customer support and outsourcing services to help enterprise clients design, deploy and manage mission-critical IT environments. With more than 65,000 employees backed by a worldwide network of operations management and customer support centers, HP Services offers capabilities and expertise to help clients develop effective IT service strategies and ensure uninterrupted business operations.

About HP

HP is a leading global provider of products, technologies, solutions, and services to consumers and businesses. The company's offerings span IT infrastructure, personal computing and access devices, global services and imaging and printing. The merged company had combined revenue of approximately $81.7 billion in fiscal 2001 and operations in more than 160 countries. Information about HP and its products can be found at http://www.hp.com.


Windows and Microsoft are U.S. registered trademarks of Microsoft Corp.


This document contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of HP and its consolidated subsidiaries to differ materially from those expressed or implied by such forward-looking statements. Further, these forward-looking statements do not constitute new or amended overall financial guidance for HP, and any anticipated aggregate contract values referred to in this document do not independently provide a basis for determining the future timing of revenue.

All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any projections of earnings, revenues (including where the underlying contract has already been signed), or other financial items; any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing. The risks, uncertainties and assumptions referred to above include performance of contracts by customers and partners; employee management issues; the timely development, production and acceptance of products and services and their feature sets; the challenge of managing asset levels, including inventory; the flow of products into third-party distribution channels; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks that are described from time to time in HP's Securities and Exchange Commission reports, including but not limited to HP's annual report on Form 10-K, as amended on January 30, 2002, for the fiscal year ended October 31, 2001, HP's quarterly report on Form 10-Q for the quarter ended January 31, 2002 (as filed with the SEC on March 12, 2002) and subsequently filed reports.

HP assumes no obligation and does not intend to update these forward-looking statements.

About HP

HP Inc. creates technology that makes life better for everyone, everywhere. Through our portfolio of printers, PCs, mobile devices, solutions, and services, we engineer experiences that amaze. More information about HP Inc. is available at http://www.hp.com.