Hewlett-Packard to buy Electronic Data Systems

Riding a hot streak that has doubled its stock price in the past three years, Hewlett-Packard Co. is rolling the dice on a $13.2 billion acquisition of technology services provider Electronic Data Systems Corp. to challenge IBM.

The all-cash deal announced Tuesday represents HP's biggest gamble under the leadership of Mark Hurd, who was hired as CEO in March 2005 to turn around the maker of personal computers and printers after its 2002 acquisition of Compaq Computer.

Investors already are worried that HP is taking an unnecessary risk on EDS, whose disappointing profit margins had caused its stock to drop by about 30 percent over the past year. HP shares sagged $2.56, or 5.5 percent, to finish Tuesday at $44.27.

EDS pioneered the concept of running computer systems and providing other high-tech help for large companies and government agencies.

Earnings

Discounters Wal-Mart, TJX Cos. report Q1 profits

Solid first-quarter profits from discounters Wal-Mart and TJX show that more Americans are hunting for bargains as they struggle to cover their monthly credit card payments, put food on the table and gas in the family car.

Wal-Mart Stores Inc., the world's largest retailer, posted a 6.9 percent increase in first-quarter profits, helped by improved customer service, better inventory control and strong international sales.

The results beat Wall Street's projections by a penny, but the company issued a cautious outlook for the current quarter and warned that the economy would be a ''critical factor'' in 2008.

TJX Cos., which operates stores under the T.J. Maxx and Marshalls names, said its first-quarter profits rose almost 20 percent, meeting analysts' projections.

Billionaire investor

Icahn buying Yahoo stock as he ponders proxy fight

Billionaire investor Carl Icahn is reportedly loading up on Yahoo Inc.'s stock in preparation for a possible attempt to shove aside the Internet icon's board and bring the company's disillusioned suitor, Microsoft Corp., back to the bargaining table.

As he mulls whether to lead a rebellion, Icahn has accumulated about 50 million Yahoo shares, a stake of roughly 3.6 percent in the California-based company, both CNBC and The Wall Street Journal reported Tuesday.

Icahn faces a Thursday deadline to submit an alternate slate of directors to oppose Yahoo's board at the company's July 3 annual meeting. Confronting Yahoo's board would fit Icahn's modus operandi. The financier has a history of accumulating stakes in companies that have let down their shareholders with poor performances or questionable strategies.

Takeover bid

Corporate Express rejects Staples' sweetened offer

Hours after saying it was open to holding talks, Corporate Express NV said Tuesday a sweetened $2.47 billion hostile takeover bid from its larger office products rival Staples Inc. is still too low.

Despite a 10 percent hike above the initial buyout proposal rejected in February, the latest bid ''still significantly undervalues the business of Corporate Express,'' the Netherlands-based firm said after its supervisory and executive boards met Tuesday.

Paul Capelli, a spokesman for Framingham, Mass.-based Staples, said his company believes its latest bid amounts to ''a significant increase'' and ''represents a fair and full price.''

Staples raised its all-cash bid before dawn Tuesday from $10.63 per share to $12.53, or from 7.25 euros per share to 8 euros.

Bernanke opinion

Fed efforts are easing

financial market turmoil

Turmoil in financial markets has eased somewhat, but the situation is still ''far from normal,'' Federal Reserve Chairman Ben Bernanke said Tuesday.

The central bank has taken a number of unconventional steps - especially since March, when the credit crisis intensified - to help squeezed banks and big investment firms overcome problems and try to get credit flowing more freely again.

Those efforts appear to be paying off and ''have contributed to some improvement in financing markets,'' the Fed chief said in remarks delivered via satellite to a financial markets conference sponsored by the Federal Reserve Bank of Atlanta.

Bernanke noted some improvements in the markets for certain mortgage-backed securities, such as those backed by Fannie Mae and Freddie Mac, as well as some fixed-rate mortgages and corporate debt.