Challenging IBM, Raising Credit

NEWS AT A GLANCE

HP buys EDS to take on IBM

Hewlett-Packard said it will buy technology outsourcing firm Electronics Data Systems for $13.9 billion, in an acquisition that could help HP challenge IBM in computer consulting and services. The all-cash offer represents a premium of more than 30 percent over EDS’s price yesterday before the news broke. (The Wall Street Journal) IBM was the top IT services firm last year, EDS was the No. 2, and HP was No. 5. (MarketWatch) It would be HP’s biggest purchase since buying Compaq for $19 billion in 2002. Spending on computer services rose to $748 billion last year. “It would put Hewlett-Packard in the sweet spot of an IT spending trend,” said CRT Capital Group analyst Ashok Kumar. (Reuters)

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Credit Agricole looks to raise $9.1 billion

Credit Agricole, France’s No. 3 bank, said it might raise $9.1 billion in a rights offer, after reporting a worse-than-expected 66 percent drop in quarterly profits, to $1.4 billion. The drop follows $1.87 billion in writedowns at its Calyon investment banking unit. (Reuters) The writedowns, tied to the U.S. subprime market, will lead to changes at Calyon, including the probable ouster of CEO Mark Litzler. (MarketWatch) “They will downscale Calyon and reduce trading positions, and that’s very good,” said ING analyst Alain Tchibozo. Rival French bank Societe Generale reported a 23 percent drop in quarterly profit, to $1.7 billion, and Belgian bank Fortis posted a 31 percent decline, to $1.3 billion. (Bloomberg)

Wal-Mart profit rises as economy drops

Wal-Mart Stores, the world’s largest retailer, reported a 6.9 percent rise in quarterly profit, to $3.02 billion, as consumers looked for discounts on staples as prices rose and the economy slumped. The earnings beat analysts’ expectations. (Reuters) Revenue rose 10.2 percent, to $94.1 billion. Wal-Mart forecast for second-quarter earnings was at the low end of analysts’ expectations, though. (CNNMoney.com) Wal-Mart went back to emphasizing its low prices, after working to expand its operations and customer base. Those changes are “rolling out,” and “it’s effective and timely with the pricing message they have right now,” said analyst Sarah Henry at MFC Global Investment Management. (Bloomberg)

Not cashing in on corn

The prices of many farm goods are at record highs, but farmers aren’t jumping to plant more of those crops. In fact, the amount of corn planted in the U.S. is expected to drop next year. That’s because while the price for corn, rice, barley, and other crops is soaring, so is the cost of planting them—corn and rice, for example, take more fuel and fertilizer to cultivate than other crops. With corn prices rising 35 percent over the past year, and growing costs jumping 47 percent, Charlie Hoppin switched to planting safflower. “I will know if I made the right decision about next December, but that’s the nature of farming,” he said. (Los Angeles Times, free registration)