|Annex Research | Annex Bulletins | Quotes | Workshop | Feedback | Clips | Activism | Columns 
The copyright-protected information contained in the ANNEX BULLETINS is a component of the Comprehensive Market Service (CMS). It is intended for the exclusive use by those who have contracted for the entire CMS service.


(An Excerpt)

Analysis of IBM’s PwC Consulting Acquisition

Half or Double Trouble?

Will This Acquisition End Up as Another “Slash and Burn” Operation?

TUCSON, Aug. 2 - When IBM announced on July 30 it was about to acquire the PriceWaterhouseCoopers Consulting (PwCC) operation for $3.5 billion in cash in stock, we could not help but think of the half full or half empty glass question.  Does combining two struggling operations into one spell half or double trouble? 

The answer depends on one’s vantage point.  The management of both companies clearly believes the combined entity will reduce trouble and increase opportunities.  That was also the basis of the industry’s biggest merger, conceived last September, and concluded this spring (HP and Compaq - see Two Losers Don't Make a Winner). 

The jury is still out on the PC megadeal.  But skeptics wonder if the consulting industry’s equivalent mammoth acquisition by IBM Global Services’ (IGS) beleaguered Business Innovation Services (BIS) unit may not end up as double trouble.

After all, just over three months ago, even IBM CEO Sam Palmisano poked fun at IBM competitors who sought to create external alliances.  “Our competition is aligning like crazy,” he said in his Apr. 24 address to IBM employees (see Sam Is No "Change Agent!", May 2002).  “Accenture is aligning with Microsoft and others.”

The BIS operation, which accounts for about a quarter of the total IGS revenue, has been by far the worst performer among the IGS business segments in the last year or so.  In the last quarter, for example, its business declined in double digits (-11%).  By contrast, the outsourcing and technology integration units, which are also under pressure in the current marketplace, each managed to eke out a 2% growth during the same period.


Our report then goes on analyze the price IBM paid for the PwCC in the context of the current state of affairs in the consulting business and the longterm outlook for the industry.

We also update our five-year forecast for IBM, and quantify the impact of the PwCC deal using nine explicit charts and two detailed tables.

And "that's all she wrote," we're afraid, for those of you who are NOT Annex Research clients, and who are now reading the complete Annex Bulletin, along with many  charts and tables which back up our analysis in the print edition of this particular report.

To find our how you can become one of our clients, and read the rest of this and other Annex Bulletins, click on . Thank you.

Best regards and as always...

Happy bargain hunting!

Bob Djurdjevic


Tucson, Arizona

e-mail: annex@djurdjevic.com 

Tel/Fax: 602-824-8111














































Volume XVIII, No. 2002-18
August 2, 2002

Editor: Bob Djurdjevic
Published by Annex Research
e-mail: annex@djurdjevic.com

P.O. Box 97100, Phoenix, Arizona 85060-7100
TEL/FAX: (602) 824-8111

|Annex Research | Annex Bulletins | Quotes | Workshop | Feedback | Clips | Activism | Columns