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Wed, Aug 25, 2010 - Page 10 News List

HP in data duel with rival Dell over firm 3Par

CLOUD COMPUTINGBoth companies want to acquire 3Par because its machines would allow them to expand out of the stagnant PC business and into online services


The world’s two biggest personal computer makers are locked in a pricey struggle over which can move away from the PC business the fastest.

Hewlett-Packard (HP) Co offered US$1.5 billion on Monday for 3Par Inc, a company whose data-storage machines are designed for “cloud computing,” or delivering services over the Internet. HP’s rival, Dell Inc, last week offered about US$400 million less for 3Par, and many analysts and investors expect Dell to make a sweeter counteroffer.

HP’s offer comes just weeks after HP CEO Mark Hurd’s ouster over inaccurate expense reports and shows that the company is committed to continuing to grow through acquisitions, even without him at the helm.

The willingness to spend so much money on such an obscure company underscores how aggressive both companies are about moving into more profitable markets than PCs.

Cloud computing is one of those markets.

It has caught on because many companies aren’t buying their own computer servers for certain tasks anymore. Instead, they’re paying to have software they would have stored on those machines delivered to them over the Internet.

Companies such as Dell and HP are trying to take advantage of the trend by offering those kinds of cloud-computing services directly on a subscription basis, along with the equipment and software for customers to build their own cloud systems.

One problem, though, is the machines needed to run such operations are designed to be shared by multiple customers. Those machines need to ramp up or scale down their output quickly based on demand. Storage machines offered by 3Par could help cut the cost of operating those services because they are designed for such tasks.

Dell began the bidding contest last week by offering to buy 3Par for US$18 per share, or US$1.13 billion. HP responded by offering a third more, or US$24 per share, for a total of US$1.5 billion.

Investors, believing Dell will make a counteroffer, sent 3Par shares above HP’s offer price. Shares of 3Par closed on Monday at US$26.09, up US$8.05, or 45 percent.

However, many analysts are worried that the price for 3Par has gotten too high, meaning HP or Dell would be overpaying for the company. HP shares fell US$0.81, or 2 percent, to US$39.04. Dell shares were down US$0.13, or 1.1 percent, to US$11.94.

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