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HP's Acquisition of EDS Misses Real Market Opportunity

Interesting contrarian viewpoint! The trend is certainly going towards SAAS. However the traditional ITO arrangements are far from dead. There's still plenty of deals to be made. In the meantime, HP should be formulating their SAAS strategy over the next several years to remain competitive.

Why the HP / EDS Deal Is Making The Street Nervous

HP historically is able to integrate new companies extremely well. The caveat is that the positive record is generally for many smaller companies - and the Compaq acquisition (much larger than others) was a total nightmare for HP. THe questions are whether they can integrate well, and whether they can manage EDS to better performance. Overall, as a long term play they really can't lose - either EDS/HP has a smooth transition and HP ends up being near dominant over IBM - or HP still maintains such share by using EDS resources and relationships after dismantling the company. Long term - strong buy.