HP-EDS won't change IBM merger strategy

NEW YORK (Reuters) - Hewlett-Packard Co's (HPQ.N) pending purchase of Electronic Data Systems Corp EDS.N will not change International Business Machines Corp's (IBM.N) acquisition plans, IBM's chief financial officer said on Wednesday.

"That acquisition of HP is going to have no effect on our acquisition strategy," CFO Mark Loughridge told the Reuters Technology, Media and Telecoms Summit in New York.

He said the company was still focused on deals for companies with intellectual property that could be used widely.

Technology companies are looking like good buys, he added. "I do think valuations are attractive now, and I think we have advantages in this framework 'cause we have a very healthy balance sheet, strong cash generation, good cash on hand," he said.

"But I also have to say we are quite financially disciplined about our acquisitions."

Hewlett-Packard shook up the technology world last week after saying it would buy EDS, a pioneer in outsourcing managed computer services. The deal would vault HP to second place in the global technology services industry, behind IBM.

"I think this could be a very logical acquisition for Hewlett-Packard. But it's quite different than our services business," Loughridge said. IBM has a strong consulting services business in addition to its EDS-like outsourcing group that maintains and runs networks, he said.

"That application management and consulting business is tightly aligned with our software business," he said, noting that software accounted for approximately 40 percent of IBM profits. "HP really doesn't really have a very strong software business," he added.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Eric Auchard and Franklin Paul, editing by Gerald E. McCormick/Jeffrey Benkoe)