Posted on 01/07/2021 11:57:53 PM PST by Cronos
France’s Atos confirmed on Thursday it has made a bid approach for U.S. rival DXC Technology in what would be the deal-hungry IT consulting group’s biggest ever acquisition.
...DXC said in a statement it had received a takeover proposal on Wednesday night and had no prior knowledge of any interest from Atos. It called the offer “unsolicited, preliminary and non-binding”, adding its board of directors would evaluate it.
Shares in DXC, which is a former Hewlett Packard Enterprise business, were up 10% to $29.13 at 1517 GMT, while Atos dropped 12% on the news, making it the worst performing stock on the Paris SBF-120 index.
Atos is working with advisers on the potential DXC bid, which would boost its U.S. presence, giving it access to a wide range of clients and B2B products including analytics and cloud applications as well as IT outsourcing services.
If successful, a combination with DXC would lead to synergies and cost savings for Atos, which has been on an acquisition spree in recent years, the sources said.
The French firm spent $3.4 billion to buy Michigan-based IT services provider Syntel in a cash deal in 2018, ranking as its biggest deal so far.
It is now looking to take advantage of investor appetite for pandemic resilient assets in technology to clinch a deal that would be in the region of its own market value of 8.2 billion euros ($10.1 billion), the sources said.
(Excerpt) Read more at reuters.com ...
I hope DXC gives them the finger. The company should be able to regain much of its former mojo with steady, competent management. While not quite a take-under, $40 a share is a fraction of what DXC is worth.
A big FU to DXC. They've outsourced thousands of jobs that citizens had to H1B visas from India, China and Mexico.
They can go straight to he!!
EDS lol, interesting you say that. I worked with guys when I was with NMCI as a subcontractor doing tech refresh who were EDS veterans, and who are well known.
Including mine.
[A big FU to DXC. They’ve outsourced thousands of jobs that citizens had to H1B visas from India, China and Mexico.
They can go straight to he!! ]
When Steve Jobs came back to Apple, it was unprofitable. Apple products were made in the US. The moment Jobs moved production overseas (to China), Apple became profitable again. Its US costs were too high and it couldn’t hike prices because Dell, Compaq, et al, were alternatives for those who were unwilling to follow Apple into the super-premium pricing bracket. This was before iPod, iPhones, iPads, iPods, Apple watches, et al.
Good thing the Rats kept Trump’s attention diverted.
I worked for HP —> HPE —> DXC and I can tell you that the price is enough for DXC.
HP and HPE and then DXC spent years going through what we called “price restructuring” which meant
1. Plan projects so that the best employees are only 10% of a project and the rest are filled by newcomers or “cheaper” resources
2. Fire the expensive resources - which turned out to be, ta-da, the experts who actually KNEW what they were doing. The expensive managers were retained of course, even if they were shite.
3. Bamboozle clients.
It has changed in the past year yes, but not enough. The revenues are still declining and clients have lost all trust in DXC. The revenues will still decline precipituously if they are not taken over - the DXC brand is toxic to customers as it means bad service
They’ve also eliminated the best employees in India, China and Mexico and retained only the cheaper employees there
No, it’s not a pricing issue. I currently run a startup and our prices are pretty damned high - we have clients who tell us that the WITCH groups sometimes quote as much as 4 times cheaper than us. But we back up our price with impeccable value-for-money and trust.
And we have more business than we can manage.
DXC went the commodity route and will lose to the WITCH companies.
[No, it’s not a pricing issue. I currently run a startup and our prices are pretty damned high - we have clients who tell us that the WITCH groups sometimes quote as much as 4 times cheaper than us. But we back up our price with impeccable value-for-money and trust.
And we have more business than we can manage.
DXC went the commodity route and will lose to the WITCH companies]
Is that because the Indian talent pool isn’t as deep as everyone imagines it to be? If so, is that a matter of training or simply because the raw talent is all tapped out, i.e. all the people smart enough to do this are already in the industry, so they’re hiring people who lack the intelligence to do a good job?
A tariff will bring all those jobs home. Trad all imports now. Take your globalist BS somewhere else. This isn’t India Republic or China Republic.
“So it appears that the issue is that it’s much harder for DXC to identify and train the Indian personnel necessary to do brainpower intensive data center work than it is for Apple to do something similar in China, Vietnam, et al, for the fairly menial assembly of vast numbers of widgets that are put together the same exact way.”
No, that’s not the case.
When HP hired the brightest Indian minds, they were able to do the brainpower intensive data work as well as Americans, Brits, French etc.
But HP and now DXC has skrimped even in India.
In India I can find top talent, but they COST - and their cost, while lower than their American or Western European ones are only about 30% to 40% cheaper. DXC looks for cheapness of 80% cheaper.
The top Indian talent goes to Indian startups, then to niche areas, then to niche sub-companies within WITCH etc.
DXC looks for the dregs among Indian talent
DXC is a major Boeing contractor. Perhaps the French are looking for inside information for Airbus?
Not really. DXC’s government contracts will be spun off
DXC’s contracts with Boeing are not government contracts. Try again.
MoffettNathanson anticipates that the combined entity could see about $300 million in cost synergies, but would not be able to increase revenues in the first year beyond one percent.
DXC’s core business (~50% of revenues) is in long-term structural decline,” Ellis wrote, “and DXC has so far made limited progress transitioning to new, higher growth service lines in Digital and Cloud.”
DXC is improving under the leadership of CEO Mike Salvino, who has eliminated many of the destructive policies that ex-CEO Mike Lawrie employed such as price concessions and rapid head count reductions that led to customer churn. She said the company is battered, but thanks to its deep relationships with enterprises is “recession resilient,” and on track to stabilize revenues by late 2021.
The article is right that mark lawry was a putz, but they are wrong about revenue stabilization by 2021. It’s going to decline further
Thanks for the update. I figured as a long-established American company, it would premium-price*, while providing premium service by hiring as close to the top echelon of talent as they could get without venturing into salary wars with startups and Silly Valley big tech. I was wrong. But I’m glad the new CEO has seen the error of his predecessor’s ways.
* Am I wrong to think that in this sector, a service provider’s association with the US is prestigious and commands a premium, though a shrinking one?
[The article is right that mark lawry was a putz, but they are wrong about revenue stabilization by 2021. It’s going to decline further]
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