EDS Provides the Scratch to StorageTek's Itch

Editor's Note: Herb Greenberg's column runs exclusively on RealMoney.com; this is a special free look at his column. For a free trial subscription to RealMoney.com, click here. This article was published Jun 28 on RealMoney.

With its stock getting clobbered, EDS(EDS Quote) Friday is touting the signing of $445 million in new technology-outsourcing contracts. The new deals, the company said, include a new contract with the state of Arkansas, a contract extension with Bell South Technology Group and a three-year renewal with Main Street Direct.

It reminds me of a deal EDS announced on April 1, in which it would get $300 million from StorageTek (STK Quote). That sure looked good at the time. But unless you were paying extra close attention, here's something you might have missed: In what appears to be the ultimate "you scratch my back, I'll scratch yours" arrangement, EDS and StorageTek struck deals to outsource business to each other.

EDS's side of the deal, which calls for EDS to handle a portion of StorageTek's IT infrastructure, was actually an expansion of an existing contract between the companies. To do that work, EDS will hire 300 StorageTek employees. ...