On Wednesday, HP announced that it will be acquiring 3COM for 2.7B. In addition to the announcement of the deal, HP raised its guidance as well as pre-releasing earnings, beating forecasts. However, the revisions lacked significant substance, with only a comment from the CEO regarding growth in China.
This deal is also seen as a move to compete directly with Cisco, the leader in networking systems. This supports the CEO's statement on the outlook revisions, as 3COM obtains nearly half of its revenue from the Chinese Market. The trend in the industry seems to be heading toward consolidation creating companies which can provide for all technology needs in one place.
HP will pay $7.90 per share, and 3COM has already traded up to 7.67 after hours, nearly closing the spread with a 35% move. HP in effect is attempting to expand from the hardware business into more profitable service areas of business. The company plans to fold 3COM services into its existing networking equipment line.
This deal follows Dell's recent acquisition of Perot Systems Corp,as well as Xerox Corporation's takeover of Affiliated Computer Services.
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4 comments:
http://www.bloomberg.com/apps/news?pid=conewsstory&tkr=COMS%3AUS&sid=afojVwNZDDT
Interesting.
Here's the real interesting story:
http://twitpic.com/p5jiv
and
http://dealbook.blogs.nytimes.com/2009/11/11/whispers-about-3com-deal/
350% apparant insider trading return tracked down to 3 trades of 3700 total contracts. Looks like someone at HPQ tried to make just under a million.
I have never been that impressed with HP. This is a company that has been around for a long time and is a very enormous company. But you really here little about it.
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