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HP Hauls In EDS

Making sense of the $13.9B EDS acquisition

Has HP hit the jackpot with its $13.9 billion EDS acquisition -- or has CEO Mark Hurd opened up a big can of worms?

Clearly looking to turn HPs services business into a cash cow a la IBM Global Services, Hurd threw open the coffers earlier this week, despite analyst concerns about EDS’s ongoing financial performance.

The outsourcing giant has not had the easiest time of it recently, taking a financial hit as users move away from mega-deals with a single vendor and even pull their servers and storage back in-house.

TBR analyst Lindy Hanson nonetheless thinks that Hurd knows exactly what he is doing -- and in her view, that has been evident since his appointment as CEO just over three years ago.

At that time, Hurd overhauled HP’s services business, she says, making tough decisions that meant a short-term revenue hit. “He got them out of deals that didn’t make sense to be in, and over time, HP services came back with a much stronger organization from a competitive standpoint,” explains the analyst. “You have to look at Hurd as someone who is not afraid to take a hit on the top line for its long-term potential.”

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