By Jon Bernstein, 17 July 2001 08:30
NEWS HP chief Carly Fiorina is putting her faith in services in an effort pull the company out of its recent slump. Yesterday she agreed to buy the computer services division of Comdisco in a deal worth $610m. Comdisco executives simultaneously filed for Chapter 11 bankruptcy protection as HP announced its plans. HP will get its hands on Comdisco's availability solutions group, a 1,300-strong organisation run by John Jackson, and concentrating on system support. Jackson is expected to continue in that role when the group is run from HP's Palo Alto headquarters. The deal mirrors moves by her nearest rivals to gain revenues through services, as margins and sales for hardware tighten. Sun's decision to team up with EDS, reported on silicon.com yesterday, is the latest example of hardware suppliers taking on market leader, IBM Global Services. Last November, Fiorina was forced to abandon plans to take over PricewaterhouseCoopers (PwC). The failure of the $18bn PwC merger - which would have given HP a chance to compete head to head with IBM on services - was blamed on "market conditions" and the company was worried further efforts to resurrect the deal would distract it going forward. Since the turn of the year, however, things have turned sour for HP. In January the company issued profits warnings and followed this with job cuts. Over the summer it has sought to cut costs by inviting employees to volunteer for a 10 per cent pay cut or eight days unpaid leave.
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