Press release :More than forty trade union representatives from Austria, Belgium, Germany, Spain, France, Sweden, UK, Italy and the Netherlands, met on 8 September to discuss the Hewlett-ackard (HP) takeover of Electronic Data Systems Corporation (EDS) at a meeting organised jointly the European Metalworkers’ Federation (EMF) and UNION NETWORK INTERNATIONAL (UNI).
Participants expressed concerns about the possible effects on employment and working conditions of the take over of EDS by HP. They also voiced discontent about the lack of information provided by both EDS and HP managements so far.
The meeting :
1) Called on HP management to ensure full and meaningful information and consultation with the trade union/employee representative bodies both at European and national levels prior to decision-making;
2) Expressed their opposition to any compulsory redundancies/layoffs;
3) Urged HP management to provide a detailed plan for redeployment and re-skilling of the existing workforce to fill current or anticipated skills shortages as an alternative to redundancies in the event of reorganisation.
UNI and the EMF will closely monitor the impact on the workforce of any proposals expected to be announced by HP management on 15 September and with affiliated trade unions take all possible steps to safeguard the interest of the workers.
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The EMF is the representative body defending the interests of workers in the European metal industry. The EMF has a mandate for the external representation and coordination of the metalworkers' unions and a mandate to engage in bargaining at European level.
For further information please contact:Editor, Peter Scherrer, EMF General SecretaryIsabelle Barthès, EMF Advisor on Company Policy + 32 2 2271057UNI Head Office, Avenue Reverdil 8-10, CH- 1260 NYON, Tel: + 41 22 365 2100
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CNNmoney.com :
Hewlett-Packard’s plans for EDS
Now that Hewlett-Packard has officially purchased outsourcing giant EDS for $13.9 billion, who’s in charge of the services strategy?
Officially, EDS is now an HP business unit based in Plano, Texas, and its CEO, Ron Rittenmeyer, now reports directly to HP (HPQ) CEO Mark Hurd. It’s a setup that suggests EDS will continue to call many of its own shots, while benefiting from HP’s economies of scale in functions like human resources, finance and IT.
When HP announced the EDS acquisition deal in May, that structure caught a number of observers by surprise. Some had expected EDS would fall under the command of HP’s enterprise technology group (also known as the Technology Solutions Group), which has blossomed into a growth and profit machine under the leadership of executive VP Ann Livermore.
Instead, in his first public comments about the deal, Hurd took a deferential tone when talking about EDS’s services legacy. “Frankly, EDS is more mature and more sophisticated in many of the processes they bring to market than we are,” he told investors.
But a clearer picture may emerge on Monday, when Hurd, Livermore, Rittenmeyer and other HP executives brief analysts on their post-merger plans for EDS. Don’t be surprised if beginning Monday, the EDS crew in Plano appears to be on a somewhat shorter leash than they did a few months ago.
Why? HP always had too much at stake to let EDS do its own thing. EDS is a sprawling services business with a bloated cost structure and more than 100,000 employees – making it cumbersome enough to weigh down HP’s profits and sink its stock price unless executives can tame it. A big reason HP felt confident enough to do the deal in the first place is that executives felt they’ve gotten good enough at finding savings (and presumably issuing pink slips) that they can take at least $750 million in costs out of EDS.
Livermore could be a significant player in that process. While on paper EDS will handle the outsourcing business while Livermore’s group provides technology backup, there’s more to it than that. Livermore was more than a passive observer in the EDS purchase – she was a major catalyst for the deal, and along with Hurd and chief strategy officer Shane Robison, she was among its chief architects. Officially or not, expect her to be among the folks behind the scenes making sure it works.
In fact it was Livermore who originally got the ball rolling on the EDS deal last fall. Things heated up after she had to pass on bidding for four multi-billion-dollar IT outsourcing deals because HP didn’t have the resources to do the work. “Customers wanted to buy more from HP, and yet I didn’t have a big enough services organization to respond to them,” Livermore told me. The solution, it seemed, was to consider buying a company to beef up HP’s arsenal.
So Livermore huddled with Hurd and Chief Strategy Officer Shane Robison to take a closer look at EDS. Later, Livermore spent hours with Hurd on the patio outside his office, considering big questions - like how an acquisition might be done and what customers would think - and even smaller ones, like how much money HP could save by merging its billing and invoice system with EDS’s.
Livermore said that after streamlining HP’s homegrown services business, she was comfortable pursuing EDS. “That was what I wanted to do first, to make sure I had a strong business to integrate something into,” Livermore told me in May. The implication here: even if EDS won’t technically get folded into HP’s smaller services organization, that’s what’s happening culturally.
Considering all that, it would be silly to imagine that after helping to craft the deal and serving as Hurd’s sounding board, Livermore will simply step back and take a supporting role. Instead, based on summer chatter in online comment forums about layoffs at EDS, I expect HP to say on Monday that EDS has continued to reduce a sizable chunk of its U.S. workforce (with more reductions coming). And I also expect to hear that EDS is working very closely with Livermore’s group to drum up the large-scale consulting deals that HP craves.
As Investors Warm To EDS Deal, H-P Shares Rise
Dow Jones, 9/13, Ben Charny
SAN FRANCISCO (Dow Jones)--Hewlett-Packard Co. (HPQ) shares have rallied over the last two months as investors shed their initial skepticism and warm to the company's $13.9 billion acquisition of outsourcing giant Electronic Data Systems Inc.
Four months ago, H-P unsettled investors when it announced it was considering the complex deal, which will expand its small presence in outsourcing and consulting. Unconvinced the combination would be beneficial to the Palo Alto, Calif., computer maker and worried Hewlett-Packard was overpaying, they dumped shares.
Hewlett-Packard shares skidded 7% to a three-month low of $45.85 on May 12, the day it unveiled its discussions with the Plano, Texas, company. The shares kept falling even after H-P Chief Executive Mark Hurd later told investors that EDS would nearly double H-P's computer services business and push H-P's earnings per share higher within a year.
On Monday, Hurd will get another chance to trumpet the EDS deal when he meets with analysts and is expected to offer the most detailed look yet at how EDS will shore up H-P's sagging margins and profit. He is also expected to outline a rapid integration process that will help H-P as it faces growing competition from International Business Machines Inc. (IBM), as well as smaller rivals such as India's WiPro Ltd. (WIT) and Infosys Technologies Ltd. (INFY).
What Hurd tells investors will likely help cement a turnaround in sentiment toward a deal that could propel H-P to the top tier of global information technology companies. Since hitting a post-acquisition low in mid-July, H-P shares have risen 13% as investors reappraise the merits of the deal. On Friday, H-P shares fell 0.5% to $46.97.
Monday's analyst meeting "could trigger meaningful earnings revisions and be a catalyst for the stock," said Toni Sacconaghi, an analyst at Bernstein Research who gives H-P an outperform rating. He recently raised his H-P price target to $55 from $50 because, in part, of his growing confidence in the EDS deal.
Sacconaghi is not alone. Sanford C. Bernstein & Co. recently raised its target price for H-P shares to $55 from $51, while Calyon Securities Inc. initiated coverage with a $60 price target and a rating of strong buy.
Under the deal, EDS will absorb H-P's $8 billion outsourcing business and the consulting portion of H-P's $16.6 billion services group. When the integration is completed, EDS, which will retain its own brand, will represent about 23%, or $32.6 billion, of H-P's revenue for fiscal 2008, which ends Oct. 31.
Anne Livermore, who runs the company's outsourcing group and played a key role in the acquisition, recently told a conference audience that roughly 1,000 employees have completed "very detailed plans and playbooks." Those plans have been distributed throughout the company for smoothing the integration, she said.
"It's been almost flawless," said Jeff Embersits, an analyst with Shareholder Value Management who advocates selling short any company in H-P's competitive path. "It's an acquisition that is going to work well."
Analysts and investors say Hurd likely will provide more detail on how H-P will handle overlapping business within the combined entity, moves that are expected to cut out a good chunk of costs. H-P's outsourcing division, which helps run corporate IT systems, offers similar services to EDS' Information Technology Outsourcing business unit.
Investors also will be looking for indications as to how H-P will deal with EDS Agility Alliance, a group of companies including EDS that co-develops new products. The alliance has several important contracts that come up for renewal soon. Among the big clients: the U.S. Navy, the U.K.'s Ministry of State Work and Pensions, and Xerox Corp. (XRX).
Lou Miscioscia, a Cowen & Co. analyst who gives H-P an outperform rating and has a $43.69 price target for its shares, thinks Hurd could find ways to cut as much as $420 million from EDS operations in the first year and another $490 million for the following fiscal year. His projections don't include benefits H-P expects from combining the two companies' capital spending and research budgets.
Hurd will have to address a perceived slip in H-P's competitiveness. The technology giant recently lost a client, Philippine Savings Bank (PSB.PH), a big Philippine financial institution that decided to replace H-P equipment in its data centers with gear from IBM. IBM touted its new contract as a "smashing defeat" of H-P, according to materials IBM circulated about the deal.
But as H-P provides more clarity, investors could become more enthusiastic about the company's prospects.
"People are warming to the EDS deal," said Shaw Wu, an analyst at equity research firm American Technology Research who rates the company a buy and has a $46.01 price target. As a result, "they are warming to H-P as well," he said.
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