HP Seals the Deal, Buys EDS For $14B

netbuzz writes "Following yesterday's spate of heated rumors, the announcement comes this morning that HP has completed a deal to buy EDS for just under $14 billion. The acquisition has been approved by the boards of both companies, according to HP. EDS CEO Ron Rittenmeyer has issued an e-mail to his employees promising that the company brand will continue and, "We are — and will remain — EDS."

Heh...

I wonder if Digital's and Compaq's CEO's sent out a similar e-mail when they got bought out by HP :)

Look at the bright point, guys... at least you didn't get bought out by IBM. They would have completely turned the business on it's head in a manner of months!

Re:Heh...

Compaq's CEO certainly sent out a similar email.

The surviving Compaq portions of the combined company still have a lot of Compaq culture in them, but the HP culture is slowly eating that away.

The CEO's extreme cost cutting is having an effect as well. Compaq employees used to have individual offices and free Cokes in the labs. Now we have cubes and expensive vending machine Cokes. Hell, they even took away the sporks from the break rooms.

So, EDS folk: welcome to the company. Say goodbye to your sporks.

Re:Heh...

'Tis better to have sporked and lost than never to have sporked at all.

Re:Heh...

If your biggest issue is the loss of a few perks, sounds like the cost-cutting was targeted perfectly.

Now if you'd complained about something that actually impacted your job performance (excessive micromanagement, armed guards outside the stationary closets, etc.), I might've felt some sympathy....

Re:Heh...

Yeah because I'm sure the few hundred dollars they spent on coke and sporks in a year cut REAL deep into the $9.6billion profit from last year. Treating people like their actually human and throwing them a few tiny perks here and there goes a long way.

Re:Heh...

Someone can define HP's culture? Compaq's culture? Digital's culture? IBM's culture? And so on? It would be interesting to finally know if they are really so much different.

Re:Heh...

I don't know that I can define the above cultures very well, but corporations do have cultures, as do brands. When I worked for Harrahs, Inc. we never said gambling even though we owned casinos. We were about responsible entertainment. We also provided a clear formula to the customers for how much "gaming" meant how many reward points.

When we became Horseshoe, we were all about gambling, gambling and gambling. We couldn't say gambler enough. Our comping system because obtuse and complicated, and seemingly random. We actually comped less, but tried to create the image that anyone could be comped for anything. Employees were also treated better even though we basically had the same management staff all the way up to the GM of the casino, but brand and company cultures were different.

Re:Heh...

Someone can define Digital's culture?

Yes.
Digital - The beatings will continue until morale improves. The CEO has a reserved parking spot for his luxury car, eats lunch in his private dinning room, and a 24 x 7 security detail.

DEC - The CEO parks his 10 year old pickup truck, the same one he uses to haul his trash to the dump on weekends, in any empty parking spot because he doesn't have a reserved one, eats lunch in the cafe like everyone else, and only has a security detail when the BoD demands it. He comes down to the hardware labs to not only admire your project but to actually understand it.

Unfortunately, Ken didn't understand business as well as he understood technology. But then Robert Palmer didn't understand either.

Re:Heh...

Having worked at or been related to someone who worked for each of the afore mentioned companies here is my take on their "cultures"

HP - Quality engineering with attention to the details (That culture is all but dead now). I think the venerable HP LJ III is a shining example of that culture. I still have clients who refuse to give up their LJ IIIs.

Compaq - Their culture evolved over the years and not for the better. In the early years they were the scrappy David to IBM's Goliath and they could do anything. Free sodas flowed freely to offset the mandatory overtime shifts and it was very exciting. Because Compaq grew so quickly I believe there were management positions filled with less than qualified people which led to a protectionist mentality of much of the middle management. As a result good people got bounced just in case they had their eye on the middle manager's job. This slowly drove a wedge between workers and management which ultimately led to their demise. I worked there in the early years and during the handover to hp. My supervisor (badge number 35) was released shortly before my project was suspended.

Digital - Many subcultures that never really got along. You had the geek set which did not understand business and a business culture that didn't know how to market what the geeks produced and a marketing and sales group who thought that the VAX would take them to retirement. Very smart people with vary narrow vision.

IBM - They have embraced their white shirt, black tie image in their current advertising campaign which is fitting because that was entirely their culture. My uncle retired from the Air Force after 20 and went straight to work on IBM BIG IRON. Up the same time every day, same clothes, hair style, etc. A very bland life by most accounts but it was fulfilling for him.

HP culture of yesteryear..

I remember what HP's culture was from the perspective of a user of fine test equipment (spectrum-analyzers RF-generators logic-analyzers distortion-analyzers) including using the technical support provided by HP (after sales) and less frequently involved in the purchasing process with the sales force of HP. For me, most of this experience started in the late 70's and continues today. However what I call HP is now Agilent that in my IMHO was the stupidest spin-off in the electronics industry.

HP was a company that would support any thing it sold even real old stuff ... including making documentation available. (service manuals with schematics may not have been free but you could get one and it was not outrageous.)

There was always a voice at the end of the phone that was competent and could answer rather complex questions on the use and application of said equipment. (now, remember this is very post sale)

On the Sales side, equipment would be demo-ed and lent by the most competent and professional staff in the business. I never had any one in the pre-sales for and instrument LIE to me in any way. Would gladly inform me of the limitations of there products. (And in not a to boastful way would try to point out weakness in the competition but this was from pride and not BS. Never had an HP sales rep bad-mouth Tektronix for example.

I recently helped my wife purchase a multifunction printer from HP (LaserJet M3035 MFP). This is just big enough that these models are not stocked in stores like Best Buy, Microcenter, Frys and the like. We chose to purchase from the toll free phone number found on the HP website. The experience we had was appalling. I don't believe that I was ever told any truth about any thing during this experience. It started with slick double talk that would make a used car salesmen on the 3AM movie sick. (I already picked out the unit, and all that was needed to be done was to enter the job/sales order). The larger part of the stupidly encountered was that we were shipped 2 units (we only ordered 1). We refused delivery on the 2nd unit. Fortunately we use my wife's business American Express Card for this purchase, as far as the billing AMX fixed it. HP tried to bill us for both units, then backed off to the shipping costs .. (shipping was included in the purchase price at the time of purchases). Turned into a major fiasco .

A friend shared with me that they believe that this is due to the Compaq sales culture that HP 'got' from the merger/acquisition. I do not know if this is true but it is a far cry from the HP of yester year.

My last dealings with Agilent have been still good but is has deteriorated from the slandered set by the old HP.

Re:Heh...

On the flip side for us Digital folks who had been under Compaq, HP was a return to much more what Digital was like than what Compaq was. It was kind of like putting up with 5 years of people saying "the culture won't change" while they tried to change it, to finally going back to a similar culture.

I think more than anything it has to deal with where the companies priorities are.

Compaq's priorities were obviously its PC business, so the Unix/Linux/VMS/etc etc folks felt like they were getting the corporate culture shaft. Then after the HP merger the culture became much more focused on services and enterprise business, so suddenly everyone at traditional Compaq felt their culture was being crushed because the focus was elsewhere.

If HP's focus really is on growing its services, then there is a decent chance that the culture might stay fairly in tact (they want them for how they are). If instead they simply plan on using EDS as a tool for driving other business goals, then there is a fair chance of being pulled into the same corporate culture.

As a final note as a DECPaq HPer. I much preferred HP's culture under Mark Hurd to the culture at Compaq. He's a cost cutter, but he's also made for a very efficient productive well focused company. More than Carly ever did for sure. Even HP's innovations seemed to have started coming back, with some of the recent announcements in nano computing, etc.

I hope HP is smarter than GM

As an HP employee I hope HP is smarter than GM was. Remember the GM bought EDS in the 80s and EDS milked GM for all it was worth. EDS did great; GM not so. Of course GM thought it was buying a company to outsource its IT to while HP is looking to merge outsourcing operations with EDS.

Yay!

Yay! An alternative to IBM Global Services from the maker of some really good servers. Too bad it's EDS, well at least it's not Accenture!

Go Ross Perot!

I admit, this amuses me...

Seeing as one contract of EDS's, NMCI, just finished (or is real damn close to finishing) a tech refresh of the computers they provide.

We all got new Dells.

Re:I admit, this amuses me...

NMCI, just finished (or is real damn close to finishing)

About freaking time. NMCI is to technology what Iraq is to foreign policy. A bloody, never-ending contractor boondoggle that cost the taxpayers billions while providing no long term value. You could bury NMCI and SPAWAR in the same hole and the world would be a better place.

NMCI aside I think this is a positive development for both companies. It will provide an alternative to Dell Consulting and a big project support source that isn't married to MS. It's a real foot in the door for HP on a lot of big projects. Nicely done.

So long DELL?

Looks like HP is moving into IBM/DELL territory ( managed IT services ). I'm not too worried for IBM.

DELL, on the other hand, has a real fight on its hands. So.. umm... Mike.. why don't you forget about your small business services crap and go back to focus on making good machines and providing good customer service.

I don't know if EDS was the best vehicle to use, but its better than trying to setup something new.

Re:So long DELL?

IBM does $54 billion in services.

EDS does $22 billion in services.

HP does $17 billion in services.

Dell does $6 billion in services.

The deal probably isn't quite about Dell.

Re:So long DELL?

It used to be that Dell sold decent computers for decent prices. They grew because they were cheaper than HP or IBM and used more commodity parts than Compaq. These days parts are getting cheaper and cheaper, and the desktop isn't as profitable due to really low margins. IBM foresaw that and sold off their PC business. That coupled with the fact that most PCs built in the last 5 years are good enough for most consumers who are not gaming so people don't need to replace their PCs anytime soon. Also, Dell has, for better or worse, tied their success to Windows. Vista now constitutes a significant amount of the cost of new PC as hardware prices drop. Even though Dell offers XP on new machines, they've already paid for the more expensive Vista (which includes downgrade rights).

It's ironic that Dell and Apple have switched places from 10 years ago where Apple was in trouble and Dell was riding high. Apple computers are price competitive if you compare them feature for feature; it's that Apple, for most part, focuses their efforts on higher end models and laptops which have better margins and avoided the pricing wars on the low end.

For Dell to remain, they have take some risks. I won't suggest that they sell off all the assets and give the money back to the shareholders that Dell suggested to Apple ten years ago.

Re:So long DELL?

Apple computers are price competitive if you compare them feature for feature;

Oddly, every time I price out a Mac Book Pro, it's well over $1,000 more than it's PC counter part. Case in point... the 17" Mac Book Pro 2.5Ghz Core 2 Duo starts at $2,799. I priced out a 17" Dell Inspiron 17" 2.4Ghz Core 2 Duo and it came up to ~$1,700 with 3-year accidental damage warranty. When I configure the Mac Book Pro to have more similar features (4GB ram, 3-year Apple Care Warranty, etc), the price jumps too $3,348.00 So, how are Mac's Price comparable? That's $1,600 more than the Dell laptop.

For that $3,348.00, you can get a cutting edge AlienWare (a Dell acquisition) with multiple video cards, RAID HD's, etc. So, what am I seeing wrong that makes the Dell Inspiron system not comparable, hardware for hardware, to the Mac Book Pro? Easy enough to load Ubuntu on the Dell giving it a "geek" OS.

Serious question. I've been wanting a Mac Book Pro, but the prices are astronomical compared to PC laptops.

The day after.

"We are -- and will remain -- EDS."

Until the day after the merger, the execs cache out, and the infighting between the remaining managers starts. Executives on the bottom end of the merger always do one of two things:

- Cash out
- Try to outmaneuver the execs on the top end of the merger and take over the whole company, with a lot of bitter intrigue in the process

You have to wonder how current EDS customers who are attached to their non HP hardware and software will feel about this when EDS suddenly has a massive bias to drive every nail with an HP hammer.

Re:The day after.

You have to wonder how current EDS customers who are attached to their non HP hardware and software will feel about this when EDS suddenly has a massive bias to drive every nail with an HP hammer.

"Hitting your thumb is equally painful whatever the hammer's brand."

- Confuscius -

this seals it: HP is now a Texas Company

They were the essence of silicon Valley, having invented a work/life system that was the envy of the industry. Then Carly came along and fucked the place up. Merging with compaq was NOT a victory for HP, but was a major move for Compaq. The pay curves and HR policies were downgraded to compaq levels, and now HP is a shell of its former self. I wouldn't be surprised if after buying EDS they move the HQ from Palo Alto to Houston or Dallas.

Very very sad.

RS

employee speaking

as an employee, all i want to know is when we here at EDS will be able to buy HP gear with employee's discount...

20% off on a laser printer would be sweeeet!!!

Re:The Deal will

EDS is an anti-labor, low pay sweatshop.

EDS is an IT services company, what else would it be?

Re:The Deal will

EDS are a useless shower of bastards who will be first against the wall when the revolution comes. Utterly incompetent, they have an over-inflated sense of self-importance which is continually bolstered by corporations and governments who continue, against all evidence and logic, to truck huge wads of cash over to the aforementioned useless bastards who then fuck it all up and deliver shit, late.

The UK government has already given the cunts enough of my cash that I should own a couple of EDS offices by now. Instead we've got sweet F.A.