Krishna Srinivasan’s Blog

Hewlett-Packard cleared an antitrust hurdle in its $13.2 billion purchase of Electronic Data Systems. A waiting period under U.S. law passed without any request for additional information from regulators, Hewlett-Packard said Monday. This indicates there’s no opposition to the deal. The purchase would more than double the computer maker’s revenue from services, challenging IBM. The transaction is HP’s largest since the $18.9 billion takeover of Compaq Computer, led by Chief Executive Mark Hurd’s predecessor, Carly Fiorina. The acquisition still requires approval from EDS investors and European antitrust authorities, Hewlett-Packard said. HP will pay $25 a share in cash, or 33 percent more than EDS’s closing price May 9, before the companies said they were in talks.

Chairman and CEO, Hewlett-Packard

When the steely Midwesterner signed on to run Hewlett-Packard in 2005, the company was in the dumps. The board had fired his predecessor, the high-profile Carly Fiorina; morale was low; and the numbers were not looking good.

All that has changed. HP is back at the top of its game. In its most recent results, net earnings rose 28% on revenue growth of 15% - and the company is so bullish that it ordered an $8 billion buyback. The Silicon Valley stalwart has overtaken Dell as the leader in the personal computer market and is turning out innovative products, such as the video-conferencing system Halo. Oh, and its stock price has tripled under Hurd, who emerged pretty much unscathed by the boardroom pretexting scandal in 2006.

Hewlett-Packard Co will reorganize its printer operations, trimming its five business units to three in a bid to become more efficient, reported on Thursday.

The announcement was made in a Webcast to employees on Wednesday by print division chief Vyomesh Joshi, the newspaper reported in its online edition.

The changes will consolidate HP’s laser-jet and commercial-printer units into one, change the head of the graphics unit and combine the ink-jet and consumer-supplies units. The printing division has already eliminated hundreds of jobs in its offices in Idaho, Oregon and Washington State, but the company said the new move would not result in large-scale lay-offs.

The printer business has long been one of the company’s largest profit centers, but consumers and businesses have become less reliant on printing in recent years. The printer unit earned $2.38 bn over the first two fiscal quarters.

Having recently launched a cash rebate scheme to encourage Internet searchers to choose Windows Live Search over the competition, Microsoft on Monday moved to make search engine selection even easier for consumers by making the choice for them.

Microsoft said that it struck a distribution deal with Hewlett-Packard, the world’s largest PC manufacturer, to install a Live Search toolbar on all HP consumer PCs in the United States and Canada starting in January.
“This agreement with HP is a strategic indicator of our increased focus on securing broad-scale distribution for Live Search,” said Kevin Johnson, president of Microsoft’s platforms and services division. “This is the most significant distribution deal for Live Search that Microsoft has ever done, and we are very pleased to be partnering with HP to help bring Live Search to millions of consumers across North America.”

HP shipped 3.9 million PCs in the United States in the first quarter of 2008, according to IDC. Turning all HP PC buyers into Live Search users would be quite a coup for Microsoft, but it’s likely that many customers will change the default search engine to Google or Yahoo. It’s doubtful, however, that such a change will affect the search box associated with a Live Search-branded toolbar, which is separate from the search box associated with the user’s Internet browser. More>>

Riding a hot streak that has doubled its stock price in the past three years, Hewlett-Packard Co. is rolling the dice on a $13.2 billion acquisition of technology services provider Electronic Data Systems Corp.

The all-cash deal announced Tuesday represents HP’s biggest gamble under the leadership of Mark Hurd, who was hired as chief executive in March 2005 to turn around the Palo Alto-based maker of personal computers and printers.

As Hurd relentlessly cut costs while demanding better execution from the company’s remaining workers, HP recovered from a nagging financial hangover that was exacerbated by the biggest acquisition in its 69-year history — the $19 billion purchase of Compaq Computer Corp., completed in 2002 over strident shareholder objections.

Now HP will try to show it learned from its mistakes by making the second largest deal in its history pay off faster.

Investors already are worried that HP is taking an unnecessary risk on EDS, whose disappointing profit margins had caused its stock to drop by about 30 percent over the past year. HP shares sagged $2.56, or 5.5 percent, to finish Tuesday at $44.27.More>>

Hewlett-Packard leapfrogged over Dell to recapture the lead as the No. 1 PC maker worldwide for the first time in almost three years, according to Gartner.

The analyst firm said Wednesday that HP edged out Dell by a mere 110,000 units shipped in the third quarter. Rival PC market trackers at IDC found HP had a larger volume of PCs by 28,000, which that firm called “a statistical tie.” More>>