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HP to buy EDS for $13.9 billion

Hewlett-Packard today announced a definitive agreement to purchase Texas-based Electronic Data Systems for $13.9 billion, in a deal that could bolster the high-tech giant's efforts to compete with IBM in the fast-growing market for technology consulting services.

The acquisition will more than double HP's business providing services to corporate and government clients, according to CEO Mark Hurd, who said it will make HP "a leading force in the global IT industry."

IBM currently dominates that business, with an estimated $48.3 billion in revenues from business services. Hurd said the combined revenues of HP and EDS from business services were "more than $38 billion" last year.

The acquisition, which has been approved by the boards of both companies, is HP's biggest since it bought Compaq for nearly $20 billion in 2002 - and the largest such deal since Hurd took the helm at HP in 2006.

HP separately announced today that its second-quarter earnings exceeded expectations, with earnings of 80 cents per share, up from 65 cents in the same quarter last year. The company said it had revenue of $28.3 billion from all its divisions for the quarter, compared to $25.5 billion for the same period a year ago.

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