EDS takeover will test Mark Hurd’s cost-cutting mettle

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With his biggest acquisition to date, Hewlett-Packard Chief Executive Mark Hurd may prove how ruthless he can be.

Since he took the helm three years ago, Hurd has driven the Palo Alto company back to the top of the computing industry by cutting costs. He’s done it relentlessly and without sentimentality, repeating the efficiency mantra every quarter — even as the company’s fortunes improved. That approach will get its biggest test yet as HP tries to absorb the 140,000 employees of Electronic Data Systems Corp., the Plano, Texas-based technology outsourcing company that HP said Tuesday it would acquire for $13.2 billion in cash.

“This is an order of magnitude bigger than what he has done before,” said Fariborz Ghadar, director of Pennsylvania State University’s Center for Global Business Studies.

Hurd, 51, indicated today that job cuts loomed as HP tried to improve its position in the market for data-center management, consulting and other high-tech services.

“We think we know a lot about how to look at overhead and how to look at costs that result from overhead,” he said during a conference call with analysts. “So think of us doing a lot of work that we know how to do and have done at HP.”

Some investors worried that this time Hurd had bitten off more than even he could chew. They have knocked more than 10% off HP’s stock since reports Monday that the two companies were close to a deal. HP shares tumbled $2.56, or 5.5%, to $44.27 Tuesday.

Read more here about the challenge Hurd faces with this deal.

-- Michelle Quinn