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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.
Best regards and as always...
Happy bargain hunting!
Volume XVIII, No. 2002-18
Editor: Bob Djurdjevic
P.O. Box 97100, Phoenix, Arizona
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