FTA-N-More.Net

NEW YORK (AP) — Hewlett-Packard Co. is bidding $1.5 billion for data storage provider 3Par Inc., offering 33 percent more than what rival Dell Inc. agreed to pay for the company just a week earlier.

The tussle for control of 3Par comes as both HP and Dell have been looking to expand beyond personal computers in search of bigger profits. The company they both want to buy provides products for organizing data on corporate servers. Those tools could help either company go deeper into "cloud computing," the growing practice of offering software on a subscription basis over the Internet.

The offer announced Monday raised questions about the direction HP is taking since CEO Mark Hurd was forced to resign earlier this month. Hurd was pushed out for filing inaccurate expense reports for his dinners and other outings with a former HP marketing contractor.

HEWLETT PACKARD CO



NYSE:HPQ
Updated: 12:16 ET
39.04 -0.81
DELL INC



NASDAQ:DELL
Updated: 12:16 ET
11.93 -0.14
Faced with questions about why HP only made an offer for 3Par after Dell jumped in last week with a bid for $1.13 billion, company executives declined to say exactly how long they have been considering the deal, or whether Hurd had been in favor of it.

HP Executive Vice President Dave Donatelli indicated that HP had made a previous offer, but would go only as far as saying, "We've been working on this deal for some time."

HP's bid of $24 per share represents a 33 percent increase over Dell's offer last Monday of $18 per share, which itself had been 87 percent premium over the company's most recent closing price at the time. Including debt, HP valued the deal at about $1.6 billion.

In midday trading Monday, shares of 3Par jumped $7.35, or 41 percent, to $25.39. The fact that it's above HP's offer price suggests that investors expect Dell to make a higher counteroffer. Dell spokesman David Frink declined to comment on the company's next move.

HP shares slipped 87 cents, or 2.2 percent, to $38.98 in midday trading. Shares of Dell, which is based in Round Rock, Texas, fell 20 cents, or 1.7 percent, to $11.87.

HP, based in Palo Alto, Calif., is the world's biggest computer maker, with Dell trailing at No. 2. But HP has gone further than Dell in stretching beyond the PC market. PC sales made up less than a third of HP's annual revenue of $116 billion during the most recent fiscal year, while they account for more than half of revenue at Dell.

With the acquisition of 3Par, which is based in Fremont, Calif., HP would add to a data storage business that makes up about 13 percent of its revenue.

The software 3Par offers is designed to maximize available space on data storage hardware — a cost-cutting step — by using a technique called "thin provisioning," by which extra capacity cane be added as needed.

HP executives cast the acquisition as adding to the one-stop-shop it is building for customers across a broad set of technologies, including data storage, network equipment and servers. The most recent deal in that effort was HP's $2.7 billion acquisition this past April of 3Com Corp., which makes routers and switches that direct Internet and other data traffic.

"Customers want to buy from fewer larger companies that they trust," Donatelli told analysts on a conference call.

Dell says 3Par accepts its hiked $1.52B buyout bid
By JESSICA MINTZ
AP Technology Writer


SEATTLE (AP) — Dell Inc. said Thursday that data-storage maker 3Par Inc. has accepted its raised buyout bid of $1.52 billion, after the computer maker topped an offer from rival Hewlett-Packard Co.

HP and Dell, among the world's largest personal computer makers, are looking at 3Par as a way to build up their "cloud computing" businesses, which involve delivering software, data storage and other services to customers over the Internet. The companies want 3Par to help keep data-storage costs down because the company has technology that doles out storage space on the fly.

Dell's new offer is $24.30 a share in cash, up from its $18-per-share offer, or about $1.13 billion, on Aug. 16. Rival HP had countered with an offer of about $1.5 billion on Monday, or about $24 per share.

DELL INC



NASDAQ:DELL
Updated: 15:37 ET
11.79 +0.005
HEWLETT PACKARD CO



NYSE:HPQ
Updated: 15:38 ET
38.29 +0.05
The back-and-forth bidding for such an obscure company underscores how serious Dell and HP are about finding more profitable businesses than selling computers. The companies that made personal computers affordable and ubiquitous must now draw new buyers by offering more sophisticated PCs with ever-lower prices. The cost of parts, meanwhile, has increased this year, putting even more of a squeeze on profits.

Cloud computing holds the promise of richer profits for technology providers 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.

Dell, HP and others 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 of the reasons cloud computing is attractive is that such systems are designed to be shared by multiple customers, which spreads out the cost of operating expensive equipment. The servers and storage computers need to ramp up or scale down quickly based on demand in order to give all the customers the same high level of service; 3Par's storage machines are made for that kind of system.

The struggle for 3Par may continue. The agreement between Dell and 3Par gives Dell the chance to match any other offers that 3Par's board might be inclined to accept. And both Dell and HP can afford to keep bidding for 3Par, which is based in Fremont, Calif.

Even though Dell is half HP's size — Dell had $53 billion in revenue last fiscal year, compared with $115 billion for HP — Dell has almost as much cash as HP. Dell reported $12.4 billion in cash and short-term investments at the end of last quarter. HP had $14.7 billion.

"We believe another counteroffer is possible," UBS analyst Maynard Um wrote in a note to clients Thursday.

In morning trading Thursday, shares in 3Par fell 60 cents, or 2.2 percent, to $26.16 — which is still above Dell's latest offer price, suggesting investors expect a higher bid from HP. Dell shares rose 14 cents, or 1.2 percent, to $11.93, and HP shares gained 34 cents, or less than 1 percent, to $38.58.

Dell and 3Par did their agreement to make it slightly more painful for 3Par to accept another offer, in the form of a termination fee of $72 million it would pay to Dell. The fee before was $53.5 million.

HP, which is based in Palo Alto, Calif., declined comment.

Shaw Wu, an analyst for Kaufman Bros., said in an interview that the only reason HP would come back with another bid would be as a defensive play to keep Dell out of the game.

Wu said HP's existing data storage line already includes similar technology. Dell, on the other hand, would see better profits from selling its own storage systems after a 3Par acquisition than it does today as a reseller for EMC Corp., a top storage provider.

Dell, which is based in Round Rock, Texas, said it expects the deal to add to earnings by fiscal 2012.

Shareholders of 3Par have until Sept. 20 to accept Dell's offer. The deal is expected to close before the end of the year, subject to government approvals and other closing conditions.