Fiorina Not Ruling Out Acquisition Of Services Company

Hewlett- Packard Compaq Computer

In a question and answer session with money managers and analysts on Wednesday, Fiorina stressed that outsourcing is a great growth market that is very fragmented and provides high margins and great opportunity for HP.

"There may be opportunities, and we will approach them opportunistically to take advantage of the consolidating nature of the outsourcing market," she said.

Those are big words coming from the CEO who pursued the purchase of consulting firm PricewaterhouseCoopers only to have that deal evaporate and who now faces a tough fight cementing the proposed $21.8 billion HP-Compaq merger.

HP attempted to buy PWC Consulting 18 months ago. Fiorina said she walked away from the deal because she couldn't "get it priced or structured right."

The combined HP-Compaq will be the No. 1 systems supplier to systems integrators and consulting giants such as Accenture, KPMG and PWC, she said."When we put this company together, we are the leading partner from day one," she said.

When one analyst noted that that is reminiscent of Sun Microsystems' strategy, Fiorina said Sun has "figured it out" and is taking the same strategic path.

"With all due respect to Sun, they are very focused on the Unix business while we are a broad-based system supplier," she said.

Fiorina noted that HP is a minority partner in one outsourcing deal and may take a majority stake in such a contract. Such acquisitions, she stressed, would be much smaller than the HP-Compaq deal, and "we feel comfortable if we can get it integrated effectively."

She warned analysts that she did not mean to say the company will turn around in six months and do such deals.