Strategic CIO // Executive Insights & Innovation
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8/25/2009
11:05 PM
Bob Evans
Bob Evans
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Great Moments In IT Analysis: Computerworld Blogger Called HP 'Fools' For Buying EDS

Heck, we all say dumb things-even some really dumb things-from time to time. But imagine my surprise when, researching the hugely positive impact HP's acquisition of EDS has had, I came across this headline from Computerworld's "Cyber Cynic" in his I-hate-everybody analysis of the deal 15 months ago: "HP buys EDS: You fools! You fools!"

Heck, we all say dumb things-even some really dumb things-from time to time. But imagine my surprise when, researching the hugely positive impact HP's acquisition of EDS has had, I came across this headline from Computerworld's "Cyber Cynic" in his I-hate-everybody analysis of the deal 15 months ago: "HP buys EDS: You fools! You fools!"While I really should be required to buy a license to shoot the fish in this barrel, let me start with two paragraphs as Exhibit A and Exhibit B of why bloggers should stick to subjects they know and avoid those they don't:

First, the opening paragraph from the post under the headline, "HP buys EDS: You fools! You Fools!":

Does any major technology company have a worse record when it comes to buying other companies than HP? I mean come on. Do you recall how well the Compaq buy out went? Come to think of it, where is fired CEO, the genius behind that deal, Carly Fiorina working now anyway?

Pretty solid insight, right? Tar the current HP executive team for the actions of the CEO who was fired a few years earlier because….oh, don't quibble over details like that! But just to show that he can be as clueless about the current CEO as he is about the former CEO, he offers this as his final paragraph:

By the time, this deal closes in the second half of 2008, what's already a questionable buyout by HP, will have become a complete waste of money. EDS staffers with real skills will already be out the door. Afterwards, it will be Mark Hurd's turn to try to explain to the board exactly what went wrong this time. I hope you have better luck than Carly did Mark, but I doubt you'll be able to make a better case for keeping your job than she did.

My, my, my. Computerworld's "Cyber Cynic" sure drank his grouchy juice that day, didn't he?

As it turns out, the EDS acquisition marks a pivotal point in HP's ongoing evolution from a company that sells a lot of hardware-much of which is becoming commodity stuff-to a highly sophisticated global source of ideas, strategic software, and selective hardware.

As various analyses made clear, the EDS acquisition made HP's numbers for the quarter and will continue to do so for some time. Here's one sample from SeekingAlpha.com:

Earnings from operation in Hewlett Packard's Services division grew 227% to $1,289 million from $567 million in the year ago period driven by the EDS acquisition completed on August 26, 2008. The year ago quarter ended July 31, 2008 and therefore EDS's results from that period are not included.

The problem comes when someone who's supposed to be an objective source of insight and analysis sets up himself instead as a self-proclaimed "cynic": because then, I guess, he feels his mission is to protect the rest of us boneheaded suckers from being duped by those dirty capitalist dogs.

"Cyber Cynic" would serve his readers a whole lot better if he were to project his indignance and cynicism on his own distorted view of how the business world works, instead of being forced by his own self-selected title to try to belittle, mock, tear down, and find fault with complex business transactions about which he clearly knows nothing.

The "Cyber Cynic" is named Steve J. Vaughan-Nichols. Based on his astonishingly inaccurate assessment, I'm loathe to offer you access to more of his work, but in the interest of fairness, I'll do so. You can find his HP-EDS "analysis" here, and a broader selection of his work here. Based on his forecast of how HP-EDS would work out, I'd only advise that you keep your own cynicism close at hand.

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