More Videos
- Apple Tells Us Everything Without Saying Anything
- Amazon's Tall Order for Earnings
- Sue Decker Sounds Off on Yahoo, Icahn, Microsoft
- Yahoo Underwhelms; Ready to Deal?
- Earnings Preview: Yahoo's Future Hangs In The Balance
- Steve Jobs "Health" Issue Just Gets Curiouser And Curiouser
- Apple: Even With Disappointment, Still Good For Long Term
- Preview: Apple Earnings Not Just About iPhone
- Yahoo Settles With Icahn But What's Next?
- IBM Earnings Beat Street--Big Time
- Mad Mail: Buy a House – Now
- Lightning Round OT: Las Vegas Sands, CapitalSource and More
- Lightning Round: FuelCell, Microsoft, eBay and More
- Fast & Furious Trades: Microsoft, Lilly, Dow...
- Market Pans Panera Bread
- Commander Planet: Unexpected Green Trade!
- Emerging Money: These Colors Don’t Run
- Is GE the New Citigroup?
- Pops & Drops: Hershey, Pepsi...
- Qualcomm Profit Rises on Web-Phone Demand
- Syngenta Earnings Beat Forecasts, Confirms Targets
- Credit Suisse Profit Beats Forecasts
- Gas Natural Considers Cash Bid for Fenosa
- ABB Profit Rise Hits Expectations, Ups Guidance
- European Shares Seen Lower, Results Flurry Dominates
- India's Bharti Airtel Profit Beats Forecast, Shares Up
- Singapore's MAS Ups 2008 Inflation View to 6% - 7%
- SK Telecom Profit Falls on Marketing, Outlook Weak
 |
HP to buy EDS |
The topline headline is that HP [HPQ
Loading...
()
] is trying to beef up its Services Group by acquiring EDS [EDS
Loading...
()
] to better take on IBM [IBM
Loading...
()
] and its services unit juggernaut. Which makes sense. HP gets about $17 billion from its Services Group against IBM's $54 billion. There's clearly market share to steal there if HP can come up with a way to steal it.
But there's another drama taking shape behind the scenes, and it all comes down to India. By acquiring EDS, HP gets its hands on EDS' 60 percent stake in mPhasiS, a significant India services and outsourcing company in Mumbai, with 27,000 workers and plans to add another 6,000 this year alone.
IBM has around 50,000 employees in the region; Accenture about 22,000. The EDS stake in mPhasiS could be the jewel in this deal getting little attention, and could also be the reason why IBM might be forced to do something dramatic--very dramatic--to protect its turf.
India shows huge potential, and it's a market owned by IBM, Accenture [ACN
Loading...
()
] and Infosys [INFY
Loading...
()
] . And with HP aggressively getting into an area so critical to IBM, IBM is going to have to answer. CEO Sam Palmisano isn't known for big-time acquisitions or bold maneuvers--unless you count his $3.5 billion take-out of PriceWaterhouseCoopers back in 2002.
But neither was Mark Hurd before the deal for EDS was announced. Several sources are telling me that Infosys would make a tempting target for IBM. Same goes for Wipro. Deals for those companies, with market caps of $25 billion and $19 billion respectively, would make the HP/EDS deal look like child's play. And could slam the door shut on HP even before it gets a chance to see whether its strategy could work.
It's going to come down to how big a threat IBM feels. In a region so important to its overall business. HP can afford to be creative since its Services Group still only accounts for 17 percent of revenue. Sometimes, it's easier being the challenger than the challenged. But IBM can wipe away all doubts with a swift stroke, a big check, and some aggressive thinking.
I think the HP deal only begins a new era in IT consolidation, particularly India; it hardly begins and ends with this deal.
IBM? Your move.
Questions? Comments?
Del.icio.us
Digg It
Data is a real-time snapshot *Data is delayed at least 15 minutes