Hewlett-Packard Gets E.D.S.

Hewlett-Packard attempt to team up with EDS, a data management company, to increase revenue. Many wonder if this union will help or hurt the company.

Hewlett-Packard, one of the largest printer and personal computer companies, said that it would get the Electronic Data System Corporation. It has been lagging behind IBM and hopes to increase revenue by joining with this business group. Hewlett-Packard, a company that has earned about sixteen point six billion dollars in revenue, hopes to double that with the help of the Electronic Data System Corporation. E.D.S. was founded in 1962 by H. Ross Perot. The New York Times reports that, "it pioneered the outsourcing of data management as well as the management of entire data centers". In 1984, the company was sold to General Motors, who introduced E.D.S. in 1996. Ben Pring, a research vice president at Gartner, knows that this will be a very significant joining and that many people will be skeptical of it. With Hewlett-Packard's influence waning, some might agree that this union may only worsen Hewlett-Packard's productivity. Although, this is not something HP has not attempted in the past. Hewlett-Packard has successfully joined with Compaq and has reorganized its prospective goals to help up and coming businesses. HP has also gained software companies such as Mercury Interactive, Opsware and Neoware. Though skeptics still seem to see problems arising from the engagement. E.D.S. has fourteen hundred thousand employees whereas HP has about seventeen hundred thousand, which almost doubles the amount of employees the company has to be responsible for. Also, in the last year E.D.S. stock has fallen from about twenty eight dollars. E.D.S.'s operating margins are six percent which is relatively modest compared to that of IBM being a bit higher than ten percent. HP is excited about its integration with E.D.S. and shows confidence from its previous business deals such as seen with Compaq. Though, many still question whether this union will benefit the company.