fell Monday after the company said it was considering a bid to acquire the consulting unit of
for up to $18 billion in cash and stock.
Hewlett-Packard, the Palo Alto, Calif.-based computer and printer company, said "significant issues" must be resolved before it could complete an agreement, which would be aimed at strengthening the company's technology consulting services.
The company's stock dropped $7, or nearly 6%, to close at $114 on Monday.
The deal, if successful, would improve upon the company's expected revenue growth rate of 15%, but would cut into earnings per share in fiscal 2001, the company said. The combination is not expected to have an effect on fiscal 2002 earnings per share.
Richard Chu, an analyst at
SG Cowen Securities
, said integrating the big consulting arm into the Hewlett-Packard operation could be a tricky and time-consuming task. Chu's firm helped to manage the company's spin-off of
in November 1999.
"At the end of the transition, we agree it's something worthwhile," he said. "But of course, there is an element of uncertainty."
The sale of the consulting arm was widely expected, since the
Securities and Exchange Commission
has pressured companies to divide their auditing and consulting businesses to avoid conflicts of interest.
and accounting giant
were separated in early August, while
Ernst & Young
sold its consulting unit to
Cap Gemini SA
of France in February.