Hewett Packard must have IBM envy. They've purchased Ross Perot's old technology services company, Electronic Data Systems, for $13.2 billion, so they can claim to be the second place provider of such services to businesses and government, behind IBM. As usual, the first rule of Takeover Club is: you're fired.
It's a field dominated by IBM, which generated $54 billion in revenue from technology services last year. HP's technology services revenue will more than double to more than $38 billion with the addition of EDS, which had $22 billion in revenue last year.
To make sure the EDS takeover pays off, HP indicated it will make significant layoffs as it eliminates overlapping jobs and other expenses. In conference calls with media and analysts this morning, HP Chief Executive Mark Hurd and EDS CEO Ronald Rittenmeyer declined to estimate how many workers might lose their jobs.
"There are obviously going to be some changes," said Rittenmeyer, who will run the combined technology services unit and report directly to Hurd.
The combined services business would have 210,000 employees and operations in more than 80 countries. It will retain the EDS brand and EDS' Plano, Texas headquarters.
HP is already the world's largest maker of personal computers. They vaulted past Dell in that department by purchasing Compaq Computer. They sure like buying things to get bigger. Maybe they can buy Yahoo! next. They might not know what to do with it, but they'll already have a big pile of pink stationery they can use after the acquisition.