InvestIdeas

Source: http://online.wsj.com/article/SB1210618 ... lenews_wsj

H-P Near Deal to Buy EDS
By MATTHEW KARNITSCHNIG
May 12, 2008 3:13 p.m.

Hewlett-Packard Co. was close to a deal to acquire Electronic Data Systems Corp. for between $12 billion and $13 billion, according to people familiar with the mater.

The terms of the deal were not immediately clear but an announcement was expected as early as Tuesday, the people said. EDS, which provides consulting and technology outsourcing services, had a market value of about $9.5 billion, based on Friday's closing price of $18.86 on the New York Stock Exchange.

A deal would bolster Hewlett-Packard's competitive position versus rival International Business Machines Corp. as a provider of services such as tech consulting and customer support. The transaction could spark further large deals in the technology sector as cash rich, mature companies such as Hewlett-Packard look to acquisitions for growth.

Neither H-P nor EDS had immediate comment.

In fiscal 2007, H-P's services unit brought in $16.6 billion of the company's $104 billion in revenue. The company has been trying to bolster its service offerings for years, since an attempt to buy PriceWaterhouse's consulting division failed in 2000. Two years later, rival IBM bought the PWC unit.

Since then, H-P has tried to grow its services business through smaller acquisitions, including the purchase of services software company Mercury Interactive Corp. for $4.5 billion in 2006.

The EDS deal would be H-P's largest acquisition since the company bought personal computer maker Compaq for $20 billion in 2002.

Write to Matthew Karnitschnig at [email protected]

reported by cnbc

afterbell annoucement by H-P...

this deal is NOT done yet...they are negotiating...

13may 730pm +8 gmt

ok...this deal is confirmed a moment ago...

HP announced that this is now done. HP has acquired EDS...details later

Source: http://www.investors.com/editorial/IBDA ... e=20080513

HP To Purchase EDS For $13.9 Billion, Taking On IBM In Technology Services
BY BRIAN WOMACK
INVESTOR'S BUSINESS DAILY
Posted 5/13/2008

Hewlett-Packard (HPQ) reached a deal Tuesday to buy Electronic Data Systems, (EDS) but cranky investors will now look for proof that this massive acquisition will help the computer maker better compete with IBM.

HP shares fell 5.5% to close at 44.27 after announcing it will pay $12.6 billion ? or $13.9 billion based on the deal's total value, including debt ? for EDS, a huge player in the global services industry.

The drop followed a 5% decline Monday on news that the companies were talking.

HP expects to close the acquisition in the second half of the year.

The deal is HP's largest since its bruising takeover of Compaq in 2002.

The new deal will push HP to No. 2 in technology services, up from No. 5, giving No. 1 IBM (IBM) a tougher competitor.

HP also previewed its second-quarter earnings, and raised its full-year outlook. For the second quarter, which ended April 30, earnings rose 24% to 87 cents a share, about 4% over views. Sales rose 11% to $28.3 billion, slightly over views.

For the current third quarter, HP expects to earn 82 to 83 cents, up 11% from the year-ago period and in line with analysts' estimates. It sees sales of $27.3 billion to $27.4 billion. That topped estimates of $27.35 billion. HP also nudged up full-year guidance.

The company will give full results Tuesday.

The financial results drew mixed reviews, but Wall Street mostly focused on the EDS merger.

HP says the move will give it a much stronger footing in the services arena — more than doubling HP's services business to $38 billion in annual sales. The new business will be called "EDS — an HP Company."

Not only will the merger beef up HP's reach in the services business, but it will also help HP sell more of its own hardware to EDS' customers, company officials say.

"For us, this was a very important strategic move," said Ann Livermore, executive vice president of the HP's services unit, called Technology Solutions Group. "It allows us to bring a much more complete (set of) services, as well as products to our customers."

But will the deal work?

Analysts cited EDS's ho-hum sales growth in recent quarters — 3% to 6% — and hefty operating costs.

"Near-term, it presents a challenge for the company because EDS was not executing well," said Shebly Seyrafi, an analyst with Caris & Co. "The margins on EDS were much lower than for HP's services business. The growth rate was flattish."

He says this won't be a simple acquisition, and investors don't always have a lot of patience.

"This digestion period could introduce a higher risk to the company," he said.

Shaw Wu, an analyst with American Technology Research, says EDS' sheer size, $22 billion in annual revenue, makes the task daunting.

"Even with a CEO of Mark Hurd's caliber, this is a handful," he said.

Still, Wu and other analysts say Hurd proved conventional wisdom wrong in 2005 when he joined the company and executed what has become a well-known turnaround at HP.

"I think it could work," Seyrafi said.

Like IBM, Hurd has been pushing toward more software and services to supplement the lumpy nature of its traditional hardware business, including computers and printers.

Under Hurd, HP has spent more than $6 billion on acquisitions in software, which tends to have healthier margins than hardware. Services gives HP more consistent revenue.

Ben Pring, an analyst with Gartner, says the move could pay off well for HP. The market is massive at $780 billion in sales and has been growing 10% a year.

HP has been largely seen as a provider of services that supports only its own products, Pring says. And HP tended to be shut out of large contracts for some big airlines or banks that often went to IBM, Accenture (ACN) and EDS.

Buying EDS will help HP address those issues, he says.

"To pick up $22 billion for $13 billion is pretty unprecedented in this industry," Pring said.

HP didn't say much about its second-quarter results, except that it was "highlighted by solid performance across HP's business segments and strong cash flow from operations."

Wu called the company's outlook "slightly disappointing."

"I think people had been somewhat accustomed to better than that," Wu said, adding that HP may have just been conservative.

Caris & Co. analyst Seyrafi says HP's results were buoyed by a weak dollar, especially with HP's extensive sales in Europe.

Richard Gardner, an analyst with Citi Investment Research, called the results "solid" in a research note.

20 May 2008 20:36 GMT

HP fiscal 2nd-quarter profit climbs
PALO ALTO, Calif. (AP) - Hewlett-Packard Co. says its fiscal second-quarter profit rose as personal systems group revenue, which includes PCs, climbed.

HP earned $2.06 billion, or 80 cents per share, compared with $1.78 billion, or 65 cents per share, in the year-ago quarter.

On an adjusted basis, HP earned 87 cents per share.

The Computer maker and technology services provider's revenue rose to $28.3 billion from $25.5 billion.

Analysts polled by Thomson Financial expected an adjusted profit of 85 cents on $28.11 billion in revenue.

HP forecast third-quarter earnings of 82 cents to 83 cents per share on revenue of $27.3 billion to $27.4 billion.

The company raised its fiscal 2008 revenue forecast to between $114.2 billion and $114.4 billion up from previous guidance of between $113.5 billion and $114.0 billion.

HP results top Street despite stronger dollar
Tue Aug 19, 2008 6:03pm EDT

SAN FRANCISCO (Reuters) - Hewlett-Packard Co results beat Wall Street targets, overcoming fears that slowing global economies and a stronger dollar would substantially weaken the world's biggest computer and printer maker.

Shares rose 3.2 percent in after-hours trading on Tuesday after HP posted solid fiscal third-quarter international sales and said it expects fourth-quarter earnings also ahead of expectations.

(truncated)

HP finalizes $13.9 Bln Acquisition of EDS - quick facts
8/26/2008 8:07 AM ET

(RTTNews) - Hewlett-Packard Co. (HPQ: News ) announced that it has completed its acquisition of Electronic Data Systems Corp. (EDS: News ), creating a leading force in technology services.

With this acquisition, valued at an enterprise value of approximately $13.9 billion, HP has one of the technology industry's broadest portfolios of products, services and end-to-end solutions.

The acquisition is, by value, the largest in the IT services sector and the second largest in the technology industry, following HP's acquisition of Compaq, which closed in 2002.

The companies' collective services businesses, as of the end of each company's 2007 fiscal year, had annual revenues of more than $38 billion and 210,000 employees, operating in more than 80 countries.

In May, HP agreed to buy Plano, Texas-based EDS for $25.00 per share or about $13.9 billion in order to better compete with International Business Machines Corp. (IBM: News ) as provider of services such as technology consulting and customer support.

well lan man....

**********************
Hewlett-Packard Advances In Pre-Market On Q4 Preliminary Results, Q1 And 2009 Outlooks
11/18/2008 8:22 AM ET

(RTTNews) - Hewlett-Packard (HPQ: News ) rose in pre-market trading, after the company reported its fourth quarter preliminary results and issued its first quarter and 2009 guidance.

The stock was up $3.69 just before 8:20 am ET, climbing to $33.03. If pre-market gains hold, the stock will open at its highest level in a week.

Hewlett-Packard announced preliminary results for the fourth fiscal quarter 2008 with revenue of $33.6 billion, a year-over-year increase of 19% or 16% when adjusted for the effects of currency.

Excluding the impact of the EDS acquisition, HP revenue grew 5% year over year or 2% when adjusted for the effects of currency.

In the fourth quarter, the company announced preliminary GAAP earnings of $0.84 per share and non-GAAP earnings of $1.03 per share.

Earlier, the company expected fourth quarter GAAP earnings to be in the range of $0.95 - $0.97 per share and non-GAAP earnings to be in the range $1.01 - $1.03 per share.

Analysts polled by First Call/Thomson Financial expect the company to report earnings of $1.00 per share on revenues of $33.09 billion for the fourth quarter.

For the first fiscal quarter of 2009, HP expects revenue of approximately $32.0 billion to $32.5 billion, GAAP diluted EPS in the range of $0.80 to $0.82, and non-GAAP diluted EPS in the range of $0.93 to $0.95.

Analysts expect the company to report earnings of $0.93 per share on revenues of $33.72 billion for the first quarter.

For the full fiscal year 2009, HP expects revenue of approximately $127.5 billion to $130.0 billion, GAAP diluted EPS in the range of $3.38 to $3.53, and non-GAAP diluted EPS in the range of $3.88 to $4.03.

Analysts expect the company to report earnings of $3.85 per share on revenues of $135.06 billion for fiscal 2009.

Hewlett-Packard cuts forecasts as first-quarter sales miss target

http://www.ft.com/cms/s/0/84ecc9b2-fe25 ... 07658.html

By David Gelles in San Francisco

Published: February 19 2009 02:00 | Last updated: February 19 2009 02:00

Hewlett-Packard, once thought to be largely resistant to the recession because of its broad range of businesses, yesterday lowered its profit and sales forecasts for the year after reporting that it had missed its firstquarter sales estimates.

The world's largest technology company registered a 1 per cent increase in sales, to $28.8bn, well off the $32bn to $32.5bn that the company had forecast. Profits fell 13 per cent to $1.85bn, or 93 cents a share, which was in line with expectations. HP's shares were down 6 per cent in after-market trading.

The California-based company, a bellwether for the technology industry, was hit by slumping demand.

Adjusting its fiscal year outlook to reflect current market conditions, HP said sales for the year will be down 2 to 5 per cent, with earnings per share of $3.76 to $3.88. "We don't want to bank on the idea that the economy is going to get better," Mark Hurd, chief executive, told analysts.

Revenue from personal computer fell 19 per cent to $8.8bn. Notebook revenue dropped 13 per cent, while desktop revenue declined 25 per cent. Revenue from lower-priced netbooks, which have been growing in market share but deliver smaller margins, was not a significant factor.

Growth in emerging markets, which had been strong and was seen as a potential buffer against slowdowns in the US and Europe, also stalled in the first quarter. Revenue declined 11 per cent in Asia-Pacific, while revenue from Brazil, Russia, India and China was down 22 per cent. "While there were pockets of organic growth, the slowdown in IT spending was global," Cathie Lesjak, chief financial officer, said.

Revenue from printing sales was down 19 per cent to $6bn as the number of printers shipped slumped by a third, in part because consumers are not upgrading their printing systems as regularly.

Martin Reynolds, Gartner analyst, said HP had fared well considering overall economic conditions. "Revenues are ugly, but it's in line with what everyone else is seeing," he said.

One bright spot for HP was the growth in its services business, where revenue increased 116 per cent to $8.7bn, primarily because of last year's $13.9bn acquisition of UK-based outsourcer Electronic Data System Corporation.

Mr Hurd said the integration of EDS was ahead of schedule, with 9,000 of 24,000 jobs already eliminated.

Just thinking.

How many employees do EDS has? How many are they cutting? Are they cutting enough?