HP Swallows EDS! Will It Taste Good?

Hewlett Packard (HPQ) is buying Electronic Data Systems Corp. (EDS) for $13.2 billion in a deal that many feel will create the second largest technology services provider behind IBM (IBM). The deal is huge and is HP’s largest acquisition since it swallowed up Compaq.

HP feels the deal will be accretive very shortly (what else were they going to say). Both boards of directors have signed off on the deal. HP also came out with some preliminary adjustments to its guidance pre EDS considerations and informed the world that they would be generating more revenues.

The one thing that is missing is the financial spreadsheets. The boards would have been provided with some very detailed analysis of what the new company would look like post merger, what needs to be cut off and what the earnings would look like. Integration issues have not been spoken too. All that we know is that a considerable amount of employees will probably lose their jobs. So what, that always happens with a merger of this size.

The media is filled with stories about creating a giant and the strategic implications thereof. Generally this is all speculation, wishful thinking and or delusional. HP has become a black box and we do not really have a good view on the future.