HP to Buy EDS: Would this mean the ability to compete against rivals IBM Corp?

Hewlett-Packard Co purchasing Electronic Data Systems Corp (EDS) could mean something special and analysts are expecting this deal to happen. So HP to buy EDS means for EDS the deal would represent a very good chance to cash in after some considerable years of cost cutting and even reorganization failed to give the company’s shares a very good lift indeed.

The main thing that pops in our minds is the fact that of HP does buy EDS an acquisition would surely boost the company’s ability to compete with the likes of their rivals IBM Corp in the services area plus for EDS employees the purchase would surely mean some job cuts. Electronic Data Systems Corp (EDS) specializes in the management of information technology operations of other government agencies and companies.

HP and EDS have confirmed on Monday that they were in talks but have said there is no confirmed guarantee that the deal will go ahead but they did say that they will not comment further until they at least make a decision. Basically what is know is that there is nowhere for EDS to go, yes they can do small acquisitions but it is so hard to see exactly how they can drive stock prices.

The HP deal was reported by The Wall Street Journal and is estimated to be worth $13 billion, if the EDS deal does go ahead it would mean the end of the road for a company which was founded by Ross Perot in 1962 for $1,000. EDS are indeed the 3rd largest public company in Dallas where their revenue of $22.1 billion was made last year. EDS has 7,200 employees in this region and around 48,000 in the U.S, in total they have worldwide 140,000 employees.

We can see HP and EDS signing a deal, just so you know shares of EDS gained $5.27 – 28% to close at $24.13.
Please answer this question “If the deal went ahead would this mean the ability to compete against rivals IBM Corp?

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