Hewlett-Packard Enterprise (NYSE: HPE) was recently asked to pay for credit monitoring services for U.S Navy sailors who affected by a recent data breach that exposed over 134,000 Social Security numbers. The breach was detected in late November after an HPE-owned laptop which dealt with reenlistment and career data was found to have been “compromised.”
The key facts
HPE provides IT and security services to the Navy as a private contractor. HPE split with HP Inc. (NYSE: HPQ) last year, and the company retained all of Hewlett-Packard’s IT contracts.
HP has worked with the Navy for over a decade, and its Navy Marine Corps Intranet (NMCI) has around 400,000 seats for over 800,000 user accounts. The network connects over 30,000 BlackBerry devices and 6,000 wireless PC cards, and oversees the delivery of over 1.7 billion emails per year.
This isn’t the first time that Naval data was exposed via its contract with HP. Back in 2013, the Navy reported that Iran had infiltrated the unclassified portion of the NMCI. The following year, The Wall Street Journal claimed that the breach occurred due to a sloppily written contract which didn’t require HP to secure the Navy’s unclassified databases.
The key takeaway
It’s unclear how much the Navy wants HPE to pay, but it probably won’t likely hurt the tech giant, which analysts expect to generate over $49 billion in sales this year. The Navy also probably won’t drop HPE as a contractor, since it would be too costly to migrate its databases to a new system.
However, the breach could hurt HPE’s reputation among other enterprise customers, which may consider hiring rival IT contractors like IBM and Oracle instead. Therefore, investors should keep an eye on the Navy data breach and see how quickly HPE addresses the alleged blunder.
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