HP silent on CSC bargain rumours

By ADAM GIFFORD

Hewlett Packard has reached agreement with services giant Computer Sciences Corporation to buy CSC's 90-person New Zealand operation.

Mark Bowman, HP's general manager for solutions, would not reveal a price, or comment on speculation that HP had paid a bargain price of between $2 million and $3 million.

"Normal business rules apply. The reason we are doing this is to acquire assets, people, processes and key customer contracts, and that formed the basis on which a price was reached," he said.

The deal was independent of any merger between HP and Compaq.

"This decision was made in New Zealand for the New Zealand business, consistent with HP's global strategy to grow its solutions business."

CSC New Zealand was originally the local services company Paxus. It has large customers in the health sector, but has never matched the weight of CSC globally, which competes with the likes of IBM Global Services and EDS for big outsourcing and application development projects.

Its most recently available results, for the year to March 1999, show a small loss on revenues of $52 million, compared with a small profit on revenues of $54 million a year earlier.

Market sentiment is that CSC has lost significant amounts of business since then, and revenue is now closer to $25 million.

The deal is seen as a way for CSC Australia to rid itself of a loss-making subsidiary while handing customers over to a reputable supplier.

Mr Bowman said most of the 90 staff would be kept on.

"Part of the transition is to look at people's skills, and which fit the business going forward. HP wants to substantially increase delivery capability in the services market."

The role of CSC NZ head Kimbal Riley is still to be determined.

Compaq New Zealand chief executive Russell Hewitt said he was unable to comment on the implications for a Compaq-HP merger.