Hewlett-Packard ... Hungry!

Good morning, investors, and welcome back to "Breakfast With the Fool." Grab a cup of joe and sit yourself down while we scan the morning papers together. So what have we here? It looks as though Hewlett-Packard (NYSE: HPQ  ) isn't content with being the world's biggest PC maker anymore. Now HP wants to corner the market on IT services as well. HP ... hungry!

HP announced yesterday that it may spend $12 billion to purchase rival IT service provider EDS (NYSE: EDS  ) . At first glance, the idea seems to have merit. Swallowing EDS would leapfrog HP past Accenture (NYSE: ACN  ) in worldwide IT market share, and an HP-EDS combo would lag only IBM (NYSE: IBM  ) in this market. What's more, HP's services business boasts beefy 11% margins -- better than twice what HP earns on PCs. So HP's just following the money.

Problem is, following the money may lead to a value trap. Sure, EDS shares fetch just half of HP's price-to-sales ratio. But there's a reason for that. EDS generates only half of the profit margins that HP's IT business earns. Neither HP nor EDS is growing as quickly as IBM is.

It seems to me that HP might be better off looking elsewhere, at what I believe is a stronger player: Accenture. This one may not be cheap eats like EDS, but it would make a more satisfying meal. Accenture is growing more rapidly than its rivals are, is more profitable than HP, and sells for a lower price-to-sales multiple than its hungry cousin serves up.

Fruit for thought
While you're chewing over those numbers, let me pour you a nice bowl of corn flakes and add a few berries for flavoring. BlackBerries, to be precise. Yesterday, fellow Fool Rick Munarriz gave you the lowdown on Research In Motion's (Nasdaq: RIMM  ) latest temptation for CrackBerry addicts: the BlackBerry "Bold." According to RIM, this "beautiful and bold" smartphone will sell for $300 to $400. The Bold ostensibly targets corporate users -- although Rick thinks the real target may be Apple (Nasdaq: AAPL  ) .

But I wonder: Is now really the best time to be hawking high-priced gadgets to cash-strapped corporate folks? On the cusp of a recession, companies seem more interested in cutting costs and laying off employees than handing out free smartphones. Then again, maybe RIM gave the Bold some new features that we haven't heard about yet. A "speed-fire" button, perhaps? Press a button, and you instantly email a pink slip to the employee of your choice. Now that could make the Bold the must-have appliance for hip HR staffers.

That's what chivalry gets you
I don't want to send you off on a down note, so let's wrap up with a bit of news of the surreal. AP reports that JetBlue (Nasdaq: JBLU  ) has just been hit with a $2 million lawsuit from an aggrieved passenger. On a recent San Diego-to-New York flight, one tourist chivalrously gave up his seat to a tired flight attendant -- with two caveats. First, the move wasn't voluntary. Second, he was told to sit on the toilet. Buh-bye!

Fool contributor Rich Smith does not own shares of any company named in this story. Apple is a Stock Advisor selection. The Motley Fool has a disclosure policy.


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