Was EDS a good buy for HP?

The Wall Street Journal asks in an article: how has EDS helped HP? The article, which is dated 18 August 2009, begins: 

“When Hewlett-Packard reports fiscal third-quarter earnings Tuesday, Wall Street is optimistic the technology giant will offer signs the tech-spending slump is over. But there is one area where investors would like to know more: HP’s tech-services unit, which has been less transparent than rivals in reporting performance details…”

Wall Street Journal article [may need subscription]

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Was EDS a good buy for HP? Probably not.

HP has a good track record in technology and service support of that technology but like many companies in the sector it has been deluded in thinking service support of own technoloogy can lead to ladting success in supporting any IT service. Cassandra blog has some good words on this:- "On the subject of analysts; perhaps they ought to measure the value of IT Services companies on more than just current results. What really matters to the continuing success of any IT Ser is the ability to sign repeat contracts and grow business via pipeline of properly qualified and quantified opportunities. Rather like oil companies they have to have new supplies of business in several stages of development from discovery through to production. If I remember rightly several years ago Shell was lambasted for getting its oil reserves book wrong even though its current results were good.

IT Ser also have 'reserves' that need quantifying in order to measure the future value of the business. The smart analysts working for firms like Citigroup, Stifel Nicolaus, Jefferies & Co, Prudential, UBS, and Credit Suisse, who are all publishing comments and recommendations on IT services companies should perhaps look at how this might be accomplished." Read on here:- http://cassandra-guidedinsights.blogspot.com/2009/05/csc-results.html

I suspect that many companies will continue to get away with 'unclear results' while analysts community is unable to understand what they do and how they do it. Read also the articles on BT Global Services in same blog. They will surprise.