International Business Machines Corp, the world's biggest seller of computers and related services, agreed to buy Pricewater-houseCoopers LLP's business-consulting unit for US$3.5 billion in cash and stock.
The purchase will reduce fourth-quarter earnings by about US$0.30 a share and add to profit by the end of next year, IBM executives said on a conference call.
The company, which gets 44 percent of revenue from computer services, is forecast to earn US$1.40 a share in this year's fourth quarter.
IBM and rivals such as Hewlett-Packard Co are trying to increase sales of services to compensate for slowing demand for computers and software.
PwC will scrap plans for an initial public offering of the unit, and the sale lets the world's largest accounting firm eliminate perceived conflicts of interest that came from selling clients both audit and consulting services.
"They're getting a fire-sale price," said Michael Kagan, who manages the US$1.2 billion Smith Barney Growth & Income Fund, which sold its shares of IBM earlier this year. "My guess is that PricewaterhouseCoopers was desperate to sell."
In the wake of Enron Corp's collapse and questions about its auditors' independence, Congress passed and President George Bush signed legislation that would limit some consulting work by audit firms, including technology consulting.
Hewlett-Packard, the second-biggest computer maker behind IBM, considered buying the PricewaterhouseCoopers unit in late 2000 for as much as US$18 billion. The company abandoned the plan after shareholders criticized the purchase, sending the stock 40 percent lower in two months. Hewlett-Packard in May bought Compaq Computer Corp to build a bigger rival to IBM in consulting and services.
IBM's Global Services unit, the company's largest by revenue, already is the biggest technology-services provider, with 150,000 workers and 2001 sales of US$35 billion.
Services accounted for US$8.66 billion of IBM's US$19.7 billion in second-quarter sales. The division sets up and manages computer networks for corporations and offers consulting services on technology projects.
PwC Consulting, which has 30,000 employees, had revenue of US$6.7 billion in the year ended June 30, 2001.
Buying the consulting unit gives IBM relationships with executives at corporations that work with PwC Consulting and adds expertise in how businesses design and manage day-to-day processes, IBM Senior Vice President Doug Elix said.
Buying PwC Consulting will help IBM add customers faster than going after new contracts itself, some investors said.
"Sometimes buying into a portfolio of clients is easier than finding them yourself," said Bruce Raabe, chief investment officer of Collins & Co, which oversees US$500 million and holds IBM shares. "The services business for IBM has been pretty stable and it offsets any volatility in their products business." PricewaterhouseCoopers is the last of the Big Five US accounting firms to sell or split off its consulting business, allowing those units to pursue lucrative contracts without facing perceived conflicts because of the accounting firm's audit work.
Taiwanese actress Barbie Hsu (徐熙媛) has died of pneumonia at the age of 48 while on a trip to Japan, where she contracted influenza during the Lunar New Year holiday, her sister confirmed today through an agent. "Our whole family came to Japan for a trip, and my dearest and most kindhearted sister Barbie Hsu died of influenza-induced pneumonia and unfortunately left us," Hsu's sister and talk show hostess Dee Hsu (徐熙娣) said. "I was grateful to be her sister in this life and that we got to care for and spend time with each other. I will always be grateful to
REMINDER: Of the 6.78 million doses of flu vaccine Taiwan purchased for this flu season, about 200,000 are still available, an official said, following Big S’ death As news broke of the death of Taiwanese actress and singer Barbie Hsu (徐熙媛), also known as Big S (大S), from severe flu complications, the Centers for Disease Control (CDC) and doctors yesterday urged people at high risk to get vaccinated and be alert to signs of severe illness. Hsu’s family yesterday confirmed that the actress died on a family holiday in Japan due to pneumonia during the Lunar New Year holiday. CDC Deputy Director-General Tseng Shu-hui (曾淑慧) told an impromptu news conference that hospital visits for flu-like illnesses from Jan. 19 to Jan. 25 reached 162,352 — the highest
COMBINING FORCES: The 66th Marine Brigade would support the 202nd Military Police Command in its defense of Taipei against ‘decapitation strikes,’ a source said The Marine Corps has deployed more than 100 soldiers and officers of the 66th Marine Brigade to Taipei International Airport (Songshan airport) as part of an effort to bolster defenses around the capital, a source with knowledge of the matter said yesterday. Two weeks ago, a military source said that the Ministry of National Defense ordered the Marine Corps to increase soldier deployments in the Taipei area. The 66th Marine Brigade has been tasked with protecting key areas in Taipei, with the 202nd Military Police Command also continuing to defend the capital. That came after a 2017 decision by the ministry to station
PETITIONS: A Democratic Progressive Party official quoted President William Lai as saying that civil society groups are organizing the recall drives at the grassroots level Some civil society groups yesterday announced that they have collected enough signatures to pass the first-stage threshold to initiate a recall vote against Chinese Nationalist Party (KMT) legislators in 18 constituencies nationwide, saying that they would submit the signatures to the Central Election Commission (CEC) today. They also said that they expected to pass the threshold in eight more constituencies in the coming days, meaning the number of KMT legislators facing a recall vote could reach 26. The groups set up stations to collect signatures at local marketplaces and busy commercial districts. The legislators their petition drives target include Fu