Hewlett-Packard Bids for PWC's Consulting Practice

By Nick Wakeman, Senior Editor


SEPT. 14 - The proposed multibillion dollar union of Hewlett-Packard Co. and PricewaterhouseCoopers' consulting business could create a new and formidable player in the government market, but the successful marriage of independent hardware and services organizations can be difficult to achieve.


"In most cases, you don't get the [desired] synergy between the organizations," said Bill Loomis, managing director of the Technology Research Group at Legg Mason Wood Walker Inc., Baltimore.


He cited IBM Corp. of Armonk, N.Y., as a company with successful hardware and consulting businesses. But he points out that IBM's services side has remained independent. "It's not glued to IBM solutions and hardware," he said.


Hewlett-Packard Sept. 11 announced that it was offering to buy PricewaterhouseCoopers' global management and information technology consulting practice. The two companies were discussing a cash-and-stock acquisition at a price in the $17 billion to $18 billion range, according to a Hewlett Packard statement.


"HP's overall business strategy is to invent useful customer solutions at the intersection of e-services, information appliances and an always-on Internet infrastructure," the company said. "The acquisition of the PWC consulting practice would complement HP's offerings by further strengthening the linkage between business process transformation and technology implementation."


PricewaterhouseCoopers of New York has about 3,000 consultants working in the government space and major customers that include the Defense Department, the Postal Service and the State and Treasury departments.


The consulting firm, which declined to release its government revenue, has been helping agencies with electronic government strategies, enterprise resource planning implementations, organizational changes and performance consulting.


Hewlett-Packard of Palo Alto, Calif., has a significant product business in the federal market and is adding to its professional services offerings. Not counting sales through various resellers and systems integrators, Hewlett-Packard directly sold about $48 million through its General Services Administration schedule in fiscal year 1999.


The company, which also provides a variety of consulting services, holds several large governmentwide acquisition contracts either as a subcontractor or as a prime. These include NASA's Scientific and Engineering Workstation Procurement II and the Navy's Tactical Advanced Computers 4 contracts, worth $673 million.


Hewlett-Packard has 86,000 employees worldwide and reported revenue of $42.4 billion in its 1999 fiscal year.