Hewlett-Packard is in talks to <A HREF="http://news.yahoo.com/s/nm/20080512/bs_nm/eds_hewlettpackard_dc">buy technology outsourcing company Electronic Data Systems</A> for $12 billion to $13 billion in a deal which would vault it to a close second to IBM in technology services.

The acquisition would be HP's biggest since its $19 billion acquisition of Compaq in 2002. Shares of EDS rose nearly 28 percent, taking its market value to about $12 billion.

HP shares fell nearly 5 percent amid some skepticism that slow-growing EDS, still considered in turnaround mode, would provide more than a one-time boost, and might not be worth a premium of as much as 37 percent.