H.P. and Dell Duel for Storage Company

H.P. and Dell Duel for Storage Company
Copyright By THE ASSOCIATED PRESS
Published: August 27, 2010
http://www.nytimes.com/2010/08/28/technology/28storage.html?hpw


The bidding war continued on Friday for the data-storage company 3Par, with Hewlett-Packard raising its bid by 11 percent, to $1.88 billion, just hours after Dell matched Hewlett’s offer from Thursday.

Hewlett pushed the offer price to $30 a share, compared with Dell’s first bid of $18 a share, or $1.13 billion, made last week.

Dell and 3Par said earlier Friday that 3Par’s board has accepted the latest bid from Dell, which only has to match the terms of other offers under its initial agreement with 3Par.

Hewlett and Dell, two of 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.

Hewlett made a $24-a-share bid for 3Par on Monday, one week after Dell’s first offer. Dell responded Thursday morning with a bid for $24.30 a share, and Hewlett countered that with a $27-a-share bid in the afternoon.

The bidding contest for 3Par may continue, as both Dell and HP can afford to keep bidding for 3Par. Even though Dell is half of Hewlett’s size by revenue, Dell has almost as much cash. Dell reported $12.4 billion in cash and short-term investments at the end of last quarter. Hewlett had $14.7 billion.

The back-and-forth bidding over previously obscure 3Par underscores how serious the two companies are about finding more profitable businesses than selling computers.

The companies that made personal computers affordable and ubiquitous must now draw new buyers by selling more sophisticated machines at ever-lower prices. The cost of parts, meanwhile, has increased, putting even more of a squeeze on profits.

Cloud computing holds the promise of richer profits for technology providers because many companies are not 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, H.P. and others are riding this 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.