HP Wins Contracts With P&G;, Ericsson

Hewlett-Packard Co. said Friday that it won multibillion-dollar deals with consumer goods giant Procter & Gamble Co. and wireless network gear maker Ericsson, turning up the heat on rival IBM Corp. in the market for computer services.

Palo Alto-based HP said the P&G; contract was worth $3 billion over 10 years.

The terms of the Ericsson deal were not disclosed. Analysts said HP would run Ericsson’s entire internal technology operations in a pact also worth billions.

“This is a big deal because HP has not been a name that’s been associated with large deals” in the information technology services sector, said Adam Frisch, an analyst with UBS Warburg in New York.

“But two large infrastructure deals from two household names really put them in the market,” he said.

IBM and Electronic Data Systems Corp. are two of the biggest players in the sector.

HP will manage P&G;’s computing and network operations, including its data centers, desktop computers, software programs and help-desk facilities, the companies said.

As part of the deal, about 1,850 P&G; employees from 50 countries will become HP employees.

The companies said they expected to reach a definitive agreement in mid-May.

HP said it would take over and manage Ericsson’s worldwide information technology operations, including its mainframe and midrange servers, desktop computers and local area network.

Ericsson will transfer all its services staff to HP. The Swedish company did not say how many employees that entailed.

The two deals are a blow to IBM, EDS and other computer services rivals, including Computer Sciences Corp. of El Segundo, Accenture Ltd. and Affiliated Computer Services Inc.

Computer services companies have been competing aggressively for large services contracts as corporate customers have slashed technology spending.

Shares of HP fell 27 cents to $15.30 on the New York Stock Exchange.