HP 2008 Annual Report Download - page 44

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
• We are building and expanding our services organization, which has been substantially
augmented through our acquisition of EDS, to support our technology businesses and enable us
to provide comprehensive solutions to our customers;
• We are developing a global delivery structure to take advantage of regions where advanced
technical expertise is available at lower costs; and
• We are repurchasing shares of our common stock under an ongoing program to manage the
dilution created by shares issued under employee stock plans as well as to repurchase shares
opportunistically.
On August 26, 2008, we completed our acquisition of EDS, a leading provider of information
technology services for enterprise customers. Accordingly, we have included the results of the business
operations acquired from EDS in our consolidated results of operations beginning on that date. Those
business operations have been included as a business unit within HPS for financial reporting purposes.
See Note 6 to the Consolidated Financial Statements in Item 8, which is incorporated herein by
reference, for additional information about the EDS acquisition.
We believe the general strategic benefits from the EDS acquisition will both enhance our
competitive position in a number of important industries by improving the breadth and depth of our
service offerings and further increase our extensive experience in offering solutions to customers in the
areas of government, healthcare, manufacturing, financial services, energy, transportation,
communications, and consumer industries and retail. EDS’s service offerings coupled with our existing
service offerings provide broad capabilities in infrastructure technology outsourcing, including data
center services, workplace services, networking services and managed security; business process
outsourcing, including health claims, financial processing, CRM and HR outsourcing; and applications
outsourcing, including development, modernization and management.
In September 2008, we announced a restructuring plan to gain efficiencies following the EDS
acquisition. The restructuring plan will be implemented over four years and includes a targeted
reduction in headcount of approximately 24,700 employees over that period, with the majority of the
reductions occurring by the end of fiscal 2009. Our plan includes replacing roughly half of these
positions in order to optimize our global footprint. As part of this plan, we recorded $1.8 billion in
restructuring costs in the fourth quarter of fiscal 2008, $1.5 billion of which was booked to goodwill and
$0.3 billion of which was recorded as a restructuring charge.
We continue to grow our business organically and through strategic acquisitions. During fiscal
2008, we acquired nine companies, the largest of which was EDS, and we expect to continue to make
strategic acquisitions periodically in the future.
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