back to article HP in talks to buy EDS

Hewlett-Packard's Mark Hurd may be remounting his company's services charge, according to The Wall Street Journal, which says he is close to signing a deal to acquire Electronic Data Systems for $12bn to $13bn. That would represent as much as a 38 per cent premium over EDS's current market capitalization, at least based on …

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Not as barmy as it sounds

EDS has a lot of potential. It has some huge juicy contracts, mainly in the defence sector. Get rid of the multi-million disasters it regularly walks into elsewhere and you've got a nice little earner. HP haven't got a good reputation but putting the two together could easily produce a company that delivers and does so profitably. It's not rocket science.

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Oh dear ...

Why on earth would ANYONE want to buy EDS? Bunch of useless tosspots the lot of them.

Never seen such a bunch of mismanaged cretins in my life ... and I had the misfortune of working for them for 10 years

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Apparently there is a question begind the logic of this deal

There is the assumption that this is a services play by HP and a number of analysts are critical as EDS Services is a low growth business.

There is another possible dimension to this, the HP Software business is much exapnded these days (following the HP and Peregrine acquisitions) and from what I recall the majority of the HP software line-up is targeted at the enterprise, these products typically delivered with extensive consulting support.

If HP were to use EDS as a services and sales vehicle for HP software then they'd likely see a much healthier growth curve.

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Noooo!

"The deal would be HP's biggest since buying Compaq"

And even more disastrous, I imagine...

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could be good

EDS's problem stems from it's poor training structure for staff - seeing how hp already have an ecellent training structure it vould turn around the negative aspects of EDS

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Anonymous Coward

EDS and Sky

What happened to the SKY litigation where EDS shagged up SKY's call centre software? Has that been settled? Aren't SKY claiming something like 700 million pounds in damages?

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Some Analysis of HP's Numbers

HP can't do services or software. They just do not understand. They just sell profitable servers and printer cartridges and barely profitable PCs.

Software and services account for just 18% of turnover with software at 2% - $2.1 billion. They consistently fail to get value from any software acqusition they make. People leave. The $4.5 billion paid for Mercury Interactive represents a loss.

They spent $10 billion in 2007 acquiring service and software companies. That's an additional $10 billion over their previous investments and existing business. That bought them $18.7 billion in turnover and $1.7 billion in profits. In any language that is a piss-poor return on investment.

Their profits are $9.6 billion - 9% of the massive turnover. They would be better off buying shares in IBM than being in business. They would make a better return.

35% of their turnover is still from PCs, mainly laptops - that is $36.4 billion. It only makes a tiny margin and drags down all the other percentages. As a business area, it is not worth the effort

Rather than spending billions on buying EDS, HP could invest the money considerably more profitably in building a EDS business unit from within. $12 billion would buy a lot of discounts to win contracts and competent staff to run them.

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Unhappy

@ Sampler - re: could be good

more likely the bad training will seep into HP and you'll end up with the worst of both companies

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Stop

@Infi

Ten years?! I only managed seven months.

What kind of fool would pay $ billions for for this load of tossers? I have never known a company so completely paralysed by bureaucracy and incompetence.

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is poisted to pay £1.5bn

Poisted...?

Doesn't even get past a spell checker, are you guys now writing and submitting this stuff via iphone?

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@Sampler

>EDS's problem stems from it's poor training structure for staff ...

From what experience I have, EDS's problem stems from the fact that they treat their staff and contractors like scum and rip off their customers....

HP may be buying an infrastructure but making it work would involve ripping the guts out of the organisation and rebuilding its culture.

Which actually sounds like a splendid idea.....

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Gates Horns

Does this mean...

... that EDS will have to replace all their non-HP kit with HP kit? I can now see the scenario where they will have to call their rival company for support. ;-).

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This might shake the EDS cart abit

HP might find alot of skeletons in EDS's cupboards, but might be just what EDS needs to get it self sorted out. if it does succeed then there will be alot of dead wood to chop out

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Anonymous Coward

Best news today so far!

Excellent I need a new PC

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Inevitable

EDS are good at delivering ITO and infrastructure, but woefully under-performed on the software sales side. This deal was inevitable - EDS management have been worrying about this possibility for the last two years - and may actually work.

From a staff perspective things can't get any worse, I agree with Sampler, EDS has a dire training record (I suffered at its hands) and if HP can bring stability to the organisation, refrain from restructuring every few months, it could be a happy outcome for all concerned - with the exception of the inevitable layoffs.

This could also see the end (in the UK) of the final salary scheme...

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Happy

GOOD NEWS

This could be good news for EDS workers , EDS is top heavy with management that don't know how to manage.

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Anonymous Coward

Two wrongs don't make it (work) right.

Sorry, don't have much respect for either 'Hewie Puke-Up' or EDS. The HP staff I have dealt with are pretty good, but even a genius cannot polish a turd. The kit does make good paperweights though, if a tad expensive.

As for EDS, my wife used to work for an organisation "supported" by them - and she (who has problems with anything much more complex than 'battery low' or 'toner cartridge empty') still had more of a clue than the "technicians" sent out to solve her problems...

Maybe we could have a compo to come up with the best name for the merged organisation. I'll start with...

High Prices, Exhausted Desperate Staff.

(And who knows, maybe this will spell the end for the whole overrated Outsourcing service model. Who's next, Lenovo to buy 'Cowboys Selling Computers'?)

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Hope it goes through

EDS are the pus ridded boil on the arse of outsourcing, would be good to see them and their millions of incompentent managers get the boot, and whatever workers remain get treated better than the poor sods do at their hands.

Thing is, what happens to that $13bn paid for them? If it goes into EDS, and they get absorbed by HP, doesn't that mean they get their money back?

The alternative is that the $13bn gets divided up among the bigwigs and fatcat who cash out like bandits, the idea of which leaves a nasty taste in my mouth.

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A good move.....

As long as it is done properly. I work for EDS and it's structure (at least in the UK) is FUBAR - this, mainly due to the Yanks, who, in terms of the UK dictate everything of any importance including the recruiting of yes men at the very top. Thus ensuring 'compliance'.

I was about to leave EDS - I will stick around now and see how it pans out. Hopefully most of the mid and senior management will go - especially all those self interested empire builders - you all know who you are.......

As far as HP kit goes, I have always preferred it for business use. Every computer manufacturing co produces a dog every now and again. In the grand scheme of things, these are forgivable as long as it's not your critical systems running on them :)

Personally I have had more problems with Dell than any other manufacturer.

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Pirate

Reduced for Quick Sale??

According to the EDS home page, the company is worth $20 billion plus, yet this supposed sale is only for around $12 billion. Is it just a coincidence then that the home page also states there are only 12 Board of Directors?

How many 'dress down days' will EDS get for the remaining $8billion??

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Alert

Well...

According to Yahoo Business News, the deal is done. $25 per share, unanimously agreed by both boards. Deal to be closed later this year...

Guess I can get cheap PCs now at least!

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Coat

snigger

Q: What is the name of HP's Unix system?

A: HP-UX

Thnks. I wonder what their system would have been called if Dave Packard had been the dominant partner. PH-UX ?

Mine's the one with the joke book in the pocket.

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13.9 Billion

It just happened 5 mins ago as far as those who care are aware: http://www.eds.com/news/releases/4550/

$13.9 billion, should be amusing, I wonder how long they have been working on that one then?

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Pirate

Confirmed

Well folks, we've just had an Email off big Ron.

It's been confirmed.

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Anonymous Coward

May be for the best

I also worked for EDS until 2006. That company needs a big shake up for the benefit of it's beaten employees as much as for it's clients.

Advice to HP:

a) EDS is massively top heavy administratively. Clear out the middle management and enpower PM's to run thier own budgets

b) Sack the sales teams. There is no skill in underbidding and that's all EDS sales know how to do. So you might as well get rid of them.

c) EDS as a company is paralysed with an obsession with financial control bordering on a disorder. You cannot micro-manage the finance of a company that size from the top.

d) Redundancies needs to happen it the USA, instead of strangling the profit making EMEA operation simply to maintain the edifice in Plano.

I could write so much more, but it would run to pages & pages. The company needs a good shakeup. Question is whether HP have the skill and reach to achieve it.

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Anonymous Coward

Entertaining

The impact on Fujitsu and the DII contract will be entertaining to watch-

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Coat

F.. Me

I was absorbed into hp, how anybody here can think they would be better off of with hp is laughable, I have not a had a real training course in over three years, my annual bonus last year was 0.5% due to Turds changes, All I can hope out of all this is redunancy.... and soon

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Anonymous Coward

Because..

For a start you got a bonus...

One up on the EDS Monkey's I can tell you.

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