HP to Take Over Billing at DirecTV

Hewlett-Packard Co. plans to announce a contract today with El Segundo-based DirecTV that HP hopes will help its managed services business grow at twice the rate of the industry as a whole.

Under the deal, worth hundreds of millions of dollars, Palo Alto-based HP will supply and manage the satellite television provider’s billing infrastructure for five years. Billing is a complex operation for DirecTV, which sees subscribers surge around televised events such as the Super Bowl, a boxing championship or a season of HBO’s “The Sopranos.”

Even after its acquisition of Compaq Computer Corp. in May, HP Services remains the smallest of HP’s four main divisions as measured by revenue. But the division, which includes the managed services business, is one of the two that made money last quarter, bringing in operating profit of $381 million for the three months ended Oct. 31.

“One of the key drivers in the merger was to place into the market a credible alternative to IBM” for providing computer services to customers, said Joe Hogan, HP’s vice president of managed services. HP is one of the largest providers in the fiercely competitive computer services industry, along with IBM Corp., Electronic Data Systems Corp. and Computer Sciences Corp.

Last month HP reported that managed services revenue grew 14% in the fiscal fourth quarter compared with the previous fourth quarter.

That growth rate “is pushing twice the industry,” Hogan said.

Hogan would not give additional details about the contract with DirecTV, a unit of General Motors Corp.’s Hughes Electronics Corp. with about 11 million subscribers. DirecTV spokesman Bob Marsocci said the company does not comment on the financial terms of its deals.

The DirecTV contract is smaller than one HP announced in September with Canadian Imperial Bank of Commerce. That agreement, worth $1.5 billion, would provide the Toronto-based bank with an overarching information technology infrastructure.

HP also is announcing today an alliance with NEC Corp. of Tokyo to provide computer services to high-end customers in Japan, China and the U.S. The partnership could include joint ventures for the delivery of services from small-scale managed computer services to taking over a customer’s information technology assets and staff.

“We’re bringing our global reach and process and methodology, they’re bringing their mission-critical support, and hopefully we’re going to be able to create some very attractive value propositions for people, especially in the Japanese market,” Hogan said.

HP shares slipped 45 cents to $18.23 on the New York Stock Exchange.