HP has had to take an $8bn charge as a result of its EDS acquisition. The computer giant acquired EDS in 2008 to try and compete with IBM in the services space. But it has been a bit of a disaster.
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From my understanding the write down means that the market value of EDS is now $8bn less than when HP forked out $13.9bn four years ago.
A bit like the signing of Andy Carroll by Liverpool. When the striker left the Mighty Magpies, he did not just give up playing in front of 50,000 people every other week but also lost his form and value with it.
There has been lots written about EDS and HP and most of it negative. When HP acquired EDS in 2008 there was an exodus of staff.
I was contacted by EDSers, as the staff are known, in the US and the UK following the take-over. They were not a happy bunch.
As a result of staff being laid off, leaving on their own accord or just being unhappy, many felt that HP would suffer as a result.
One thing seems clear and that is the fact that lots of former EDS staff are now working for other companies in the sector. Every event I seem to go to I bump into someone who was at EDS but is now working for one of its former competitors.
People always tell me that EDS revolutionized the IT services market. I suppose HP spent billions of pounds on it for a reason. It was never going to retain everyone was it?
So the break-up of a company like EDS has probably done the wider industry some good by spreading talent and experience. Especially with non-specialist services companies like Dell and HP trying to emulate IBM Global Services.
So do you think the exodus at EDS helped the competition? And how well is HP doing in the services sector without the staff that left? It has lost contracts too. “The mice have been nibbling at the EDS sack of grain since HP acquired it, but this could create a hole that grain might pour out of,” said a contact of mine.
EDS history before HP; according to Wikipedia: “Electronic Data Systems (EDS) was an American multinational information technology equipment and services company headquartered in Plano, Texas. It was established in 1962 by H. Ross Perot. Perot’s goal was to start a company that offered skilled electronic data processing management personnel along with the computer equipment. He targeted large corporations and offered long-term contracts at a time when short-term contracts were the norm. In 1984, General Motors agreed to buy EDS for $2.5 billion. In 1996, GM spun off EDS as an independent company and became one of its largest clients.”