In August 2008, Hewlett-Packard (HPQ) bought Ross Perot's first company, Electronic Data Services, or EDS, in a deal worth $13.9 billion. It then proceeded to slash thousands of jobs. Now that deal is paying off in spades for HP. On Monday, Dell (DELL) announced that it would pay $3.9 billion for Ross Perot's second company, Perot Systems (PER). Michael Dell would do well to learn from HP's CEO Mark Hurd about how to make his latest deal pay off.
The reason? HP claims that its services operating margins have improved since the deal closed and it has held onto 199 of EDS's top 200 accounts, according to the New York Times.
And it's getting new accounts. HP, which said on Wednesday that it would rename its EDS unit HP Enterprise Services, recently closed 32 deals worth over $100 million and its customer service scores rose since the deal closed. HP is even beating competitor International Business Machines (IBM) to the punch -- winning a $1 billion outsourcing contract for British insurer, Aviva.