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Technology Stocks : Hewlett-Packard (HPQ) -- Ignore unavailable to you. Want to Upgrade?

To: The Duke of URL© who wrote (2725)	3/23/2003 5:43:33 PM
From: PCSS	Read Replies (1) \| Respond to of 4345

EDS in strategic talks with tech groups By Richard Waters in San Francisco Technology groups including Microsoft and Hewlett-Packard have approached Electronic Data Systems in recent months about strategic relationships involving a large minority investment or even outright acquisition, according to people familiar with the situation. The struggling IT services company, which last week ousted Dick Brown as chief executive officer, has said it will look at all its strategic options, but is not thought to be actively pursuing any approach at this stage. The flurry of interest around EDS reflects a broader realignment in the technology industry, prompted by changes in how big companies buy computer systems and by IBM's success in building the world's biggest IT services business on top of its traditional computer systems business. A strong presence in IT services is seen by many software and computer systems companies as a way to protect sales at a time when customers are trying to squeeze costs and narrow the number of their suppliers. EDS has received "proposals from more than one party," said one person close to the situation. Another person put the number of approaches at "two or three." Both people added, however, that these approaches were not currently being pursued. Microsoft's proposal was said to be the most direct, though it was only interested in a minority investment, not a full acquisition. The software group's push into selling more of the enterprise grade software that big companies need is throwing it increasingly into competition with IBM and other broader systems companies. The software company is also understood to have looked at making a minority investment in Infosys, an Indian IT services company. However, any such investment could upset its relationships with other services companies and Steve Ballmer, Microsoft's CEO, is a director of Accenture, a big EDS competitor. Meanwhile, HP, though pursing a relationship with EDS, is thought unlikely to attempt a full acquisition while it is still digesting its acquisition of Compaq. Last week's appointment of Michael Jordan, a former McKinsey consultant, as chairman raised expectations that EDS may look more seriously at deals with other companies. While it is not thought to face liquidity problems, EDS's practice of borrowing heavily to engage in big corporate outsourcing contracts has increased its need for capital.