Green Business: What's a million or so between friends...
By Adam Lass
In this article
Hewlett Packard (HPQ:NYSE) has received a government contract worth $5.6 billion.
HPQ is outstripping International Business Machine (IBM:NYSE) in server sales.
WOW call options against HPQ are already up 96% in less than 30 days, and may yet hit 209% before mid-summer.
Green Business: What's a million or so between friends…
…When you are about to pocket several billion?
The folks in Hewlett Packard's (HPQ:NYSE) corner office are looking to give the World Wildlife Fund $2 million in cash and equipment to help power up three of its pet projects: The Epicenter for Climate Conservation, Climate Witness and Information and Communication Technology Innovation as a Driver of Climate Change Solutions.
But wait: this old-school tech giant wants to get even greener by procuring 50 million kilowatt hours of renewable electricity during 2007, upping HPQ's renewable energy purchases by about 350%. This is part of its longer-term strategy, which includes global energy use by 20% by 2010.
Has it gone round the bend with this green thing? How can it afford such liberal largesse?
Easy: Over the past decade and a half, HPQ has sold the space jockey's at NASA more than $620 million worth of hardware and software, thousands of service hours putting it all together and patching it up when it busts.
In fact, two different independent bean counters noted today that HPQ has now edged ahead of IBM for top ranking in sales of server computers in the first quarter 2007, with 29.2% of the worldwide market as measured by revenue.
But that doesn't hold a candle to what's coming. WOW readers will recall that I told them a few weeks ago that it was HPQ's turn to win a few hands.
Well it just swept the table on this deal. For the next seven years, NASA tech buyers looking for anything from desktop PCs to network blades (not to mention help in wiring it up and keeping it running) will shop exclusively at HPQ's store.
To the tune of $5.6 billion. Yeah that's right: we are talking an increase of an order of magnitude.
Better yet, this contract is also open to a host of other federal departments who habitually follow NASA's lead when it comes to tech purchases.
And you know what's best? Regular readers will recall that I absolutely despise Microsoft (MSFT:NYSE) for how flabby and indecisive it has become. So you can imagine how pleased I am to announce that all of the gear in the NASA deal will be run with Linux and Unix operating systems.
Needless to say, HPQ set yet another new 52-week high today at $46.11 -- yet another notch in the post on its way toward our target of $49.07. WOW readers' HPQ calls just hit gains of 96%. Currently sporting a delta of .91, a share gain of $3 will increase that option gain to 209%.
The sector rotation into tech stocks is by no means played out. Bryan and I added another call to the mix yesterday. This time we are buying a turnaround story as a famous grocery marketer tries his magic on a lagging “toys-for-big-boys” manufacturer.
If you are still looking to get in, I can say with confidence that there is still plenty of room for this one to move (but no, I am not going to name it until all our WOW readers have had a chance to accumulate contracts).
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Adam Lass is the founder and manager of the WaveStrength Group, and is a contributing editor for Taipan Financial News. As the creator of WaveStrength's proprietary analysis system, Adam's expertise has shaped a franchise of successful investment newsletters and services, including WaveStrength Options Weekly and WaveStrength Apex.
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