Friday, October 17, 2008

GM to cut orders at HP; Unwilling to place bets with single vendor!

``The question is, do I have too much in one bucket?'' said Szygenda, who has overseen GM's technology budget for more than a decade. ``Down deep, economics tells me I need some more diversity.'' He stressed that the carmaker has no plans to seek new suppliers immediately.

Hewlett-Packard, led by Chief Executive Officer Mark Hurd, has pledged to offer the same amount of value in spite of the lack of competition for orders, Szygenda said yesterday.

``We understand GM's concerns and are committed to working with them to address those concerns,'' Jeff Kelly, senior vice president of the Americas region at Hewlett-Packard's EDS unit, said in an e-mailed statement.

Szygenda, 60, is seeking to reduce expenses as GM struggles to increase cash flow amid a global credit crunch and the lowest U.S. car sales in 15 years. Pitting technology suppliers against one another for contracts has helped save GM $12 billion over the past decade, he said.

GM rose 18 cents, or 2.9 percent, to $6.40 at 4 p.m. in New York Stock Exchange composite trading. Hewlett-Packard, based in Palo Alto, California, climbed $1.05 to $39.66.

EDS's History

GM bought EDS from its founder, H. Ross Perot, for $2.5 billion in 1984, gaining its own in-house computer operations. Detroit-based GM spun the unit off in 1996, giving EDS more freedom to seek business from the carmaker's rivals.

Hewlett-Packard, the world's biggest PC maker, agreed in May to buy the company for $13.2 billion, more than doubling its computer-services revenue. The company is now the second-largest provider of computer services in the world, trailing International Business Machines Corp. Sales in the services unit rose 14 percent to $4.75 billion in the latest quarter.

Since then, borrowing costs have skyrocketed amid the worst U.S. banking crisis since the Great Depression, spurred by the collapse of investment banks such as Lehman Brothers Holdings Inc. The credit freeze has limited access to funding for GMAC LLC, the carmaker's financing arm.


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