Hewlett Packard is one of the computing industry giants.  They dominate the PC industry.  They virtually created the modern printer industry.  They are careful to make each division of their company pull its own weight.

No one division of HP will be carried with losses by the divisions which have profits.

So what's wrong?

Last year, HP acquired EDS.  This added about 100,000 fulltime employees to HP's payroll.

No problem so far, right?

EDS was originally founded by H. Ross Perot, and it was acquired from him by GM.  During GM's tenure as owner of EDS about 90% of their revenue came from the computer support and consulting contracts with GM.

With HP's acquisition, only about 80% of EDS's revenues com from GM contracts.

And GM has gone bankrupt.

80,000 HP staff who previously worked full time on GM contracts have suddenly have no revenue that they contribute to the corporate bottom line.

HP may gamble that a restructured GM will still need the kind of consulting and support that EDS used to provide.  And GM may decide that they want to continue the contracts they have with HP.

But GM may also look around and decide the price for computer support people has dropped through the floor.  If the do this (and it is true), they will recruit directly to place GM employees into the computer support jobs that HP/EDS has been supplying.

When that happens, HP will go through a series of layoffs, ending up with 80,000 to 90,000 jobs lost.

These staffers may have the foresight to recognize what is happening.  If they do, they will apply to become those GM employees that are being recruited. Since they know the job, have exactly the right skills, and all of the contacts and inside information they need, they will snatch up most of those support and consulting positions right away.

HP charges a 40% markup on all of their consulting and support hours.  So as individual employees, GM can afford to actually give a raise to the people they are raiding from HP.

It will be a deal the consultant or support engineer will find hard to pass up.  Stay with a tenuous and wobbly job at HP or take a job with a recently bankrupt GM.

I'm glad I don't have to make that choice.

Here is the ultimate bottom line:

80,000 suddenly umemployed computer technicians will blow the bottom out of all computer related job salaries.