Network Computing is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

HP Faces EDS Integration Challenge

HP faces major challenges swallowing its $13.9 billion EDS acquisition, warn analysts, highlighting the services giants recent struggles in a tough economic climate.

Goldman Sachs analyst David Bailey, for example, voiced his concern over HP’s decision to buy a “slow/no growth services company” at a time when users are tightening their purse-strings.

”Even with HP’s track record of improving profitability in struggling businesses, it will undoubtedly take time for HP to improve EDS’s margins, given the ongoing cost cuts over the last few years at the company," he wrote in a note released this morning.

EDS’s recent first-quarter profits were down year-over-year, and the services giant has been shedding staff for some time in an attempt to streamline its business and get its costs under control, particularly after the recent loss of a Verizon contract worth up to $9 billion.

Baird analyst Jayson Noland also voiced concern about the deal.

  • 1