Two worlds collide
Computing giant Hewlett Packard has clearly decided Cisco has had it too easy for too long in the networking market, and decided to give it a run for its considerable money with the acquisition of 3Com for $2.7 billion.
Cisco has been hyperactive in its acquisitions this year, with the apparent aim of making itself the sole provider of end-to-end enterprise communications solutions. HP is positioning the 3Com acquisition as a challenge to this and as a strengthening of its ‘next generation data center' strategy, which combines computing, networking and services into one offering.
"Companies are looking for ways to break free from the business limitations imposed by a networking paradigm that has been dominated by a single vendor," said Dave Donatelli, executive VP and GM of enterprise servers and networking at HP. "By acquiring 3Com, we are accelerating the execution of our Converged Infrastructure strategy and bringing disruptive change to the networking industry.
"By combining HP ProCurve offerings with 3Com's extensive set of solutions, we will enable customers to build a next-generation network infrastructure that supports customer needs from the edge of the network to the heart of the data center."
Other benefits HP is claiming to justify paying $7.90 per share - a 39 percent premium over yesterday's closing share price of $5.69 - for 3Com, is its enhancement of HP's Ethernet switching offerings and and of its presence in China. It also gets its hands on 3Com's TippingPoint network security arm.
The announcement was made after markets closed and, as you would expect, 3Com's shares shot up in after-hours trading. However, there does seem to have been a marked increase in 3Com share trading activity leading up to the announcement too. More work for the SEC, perhaps.
