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HP Tipped To Buy EDS To Level Playing Field with IBM

Buying the Consultant is Meant to Help HP Compete On the Services Side Against Rival IBM

Hewlett-Packard is supposed to be this close to buying Electronic Data Systems for somewhere in the heady neighborhood of $12 billion-$13 billion, according to the Wall Street Journal, a pretty premium over its $9.5 billion market cap Friday.

The paper thinks there could be an announcement on Tuesday.

Buying the consultant is meant to help HP compete on the services side against rival IBM.

HP did about $16.6 billion in services last year and earned $1.8 billion on it. EDS had revenues of $5.8 billion.

IBM did about $57 billion in services, earning $5.6 billion.

HP hasn’t spent the kind of money they’re talking about since it bought Compaq for $20 billion. It would be CEO Mark Hurd’s biggest buy since he arrived at HP.

The company bought Mercury Interactive for $4.5 billion in 2006.

During her sojourn at HP, Carly Fiorina tried to PriceWaterhouse’s consulting arm for a reported $19 billion and failed. IBM later picked it up for a song.

HP reports its latest quarter on Thursday.


More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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Most Recent Comments
Adam Hartung 05/14/08 04:11:16 PM EDT

Merging the lousy performing EDS with the weak HP services unit does not bode for better health. The leaders are Infosys, TCS, Cognizant and WiPro. HP needs to innovate and better develop its global delivery model - not try to see if it can "fix" the badly performing EDS. REad more at http://www.ThePhoenixPrinciple.com