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
HP announced yesterday that it may spend $12 billion to purchase rival IT service provider EDS
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
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