HP Snaps Up 3PAR For $2 Billion

adeelarshad82 writes "The bidding war between HP and Dell has reached a swift and dramatic conclusion. One could even say HP sniped the auction at the last minute — to the tune of $2 billion for the acquisition of data storage provider 3PAR. HP's not-so-subtle efforts to pull the company away from a preliminary merger agreement with Dell — a $1.15-billion arrangement announced August 16 — took three successive bids to reach an ultimate conclusion. The final acquisition cost of $2 billion, confirmed by 3PAR late Friday, represents a price of $30 per share of 3PAR stock. That's triple the closing price of the company's stock before Dell's initial offer was made public, and more than double after."

Comments

First post

[Anonymous Coward]

OM NOM NOM NOM ACQUISITIONS

Re:First post

[Tetsujin]

So I guess it averages out to $666,666,666.67 per PAR?

Re:First post

[camperdave]

$666,666,666.67 for a PAR? How much would I get for a 20 over par?

Re:First post

[Tetsujin]

$666,666,666.67 for a PAR? How much would I get for a 20 over par?

$666,666,686.67, obviously...

Re:First post

[hairyfeet]

Am I the only one that sees this "In the cloud" feeding frenzy as just as damned stupid as the "On the Internet" dotbomb we had in the late 90s? After all we are seeing companies throwing insane money on a technology that requires all the ISPs to upgrade their infrastructure and STILL offer fair pricing whereas if we have learned anything from the greedy duopolies is that it is far more likely they will simply install caps rather than let go of any of their precious profits.

I have a feeling all the "In the cloud" supporters are gonna get a REALLY nasty wake up call when most of the ISPs start capping the hell out of everyone and their customers take one look at their Internet bill and say "screw that!". Betting the farm on someone else, whom you don't control, building the infrastructure your service requires is just plain stupid IMHO. No different than that OnLive or whatever its called betting folks are gonna have enough bandwidth to play AAA quality titles by just streaming the whole thing. Might work in Asia, where 100Mbit connections are the norm, but here in the USA where 2Mbit lines with caps are all too common all this "In the cloud" stuff is gonna blow chunks.

Re:First post

[Junta]

For the most part, on the vendor side it currently makes a fair amount of sense. A lot of money is being currently dropped on the 'cloud' buzzword by the market. Now, the wisdom of the market to be crazy over cloud, that's another story.... I do think HP is awfully optimistic by dropping $2 billion on 3par, hoping to recoup the losses before the market wakes up from the 'cloud' dream.

You are right that if they want all the video-on-demand, full quality home movie storing, and similar behavior that is really needed to make these long shots pay off, they'd have to push for synchronous 100mbit or better for wider markets.

Re:First post

[Johnny Mnemonic]

You just explained why the web would fail, btw. How could you build an ecommerce web site when you're depending on someone else to provide the bandwidth?

Re:First post

[hairyfeet]

I hate to break the news to you, but we actually shopped during the dialup days. Sure you couldn't cover your ecommerce site with catchy flash animations and crap, but it worked just fine. That is a HELL of a lot different than gobbling up multiGB chunks of bandwidth to push software that will work just as good most of the time as a desktop app. Why do you think Google is putting caching servers with high bandwidth content like Youtube all over the place? because they like to spend money? No, it is because bandwidth costs are seriously hurting them that's why.

Now maybe you can explain to me, because I'm not seeing it, why the major duopolies are gonna spend billions in infrastructure upgrades just so the "In the cloud" model will work. Do you think they are just naturally generous? No, thanks to the lack of net neutrality and the fact that they have no competition in many parts of the country they have NO reason to upgrade! Oh sure, they'll make sure their services work nice and smooth, but we are talking about companies that are NOT ISPs. And frankly I'm betting the future is gonna be nasty caps for all "non local" (translation, non ISP owned) services, since they know their audience simply has no choices. For all this "In the cloud" dotbomb style stuff to work, we'll probably need a good 3-4 times the bandwidth we have now. Do you see anybody putting out that kind of network rollout nationwide? anybody? Nope, even Verizon has cut back on the amount of places they are rolling out FIOS, and the rest like Comcast and Cox are talking caps.

TLDR? E-commerce doesn't cost ISPs lots of money in upgrades and "In the cloud" most certainly does. in a dead economy where they can't pass those prices on to consumers I sincerely doubt you'll be seeing the kind of rollout required to make the scheme work. Which means just like the dotbomb this house of cards will fall, the only question is how many morons like HP are gonna get bit first.

Re:First post

[hab136]

No, it is because bandwidth costs are seriously hurting them that's why.

Last I heard, they used peering to reduce their bandwidth costs for Youtube to near-zero.

For all this "In the cloud" dotbomb style stuff to work, we'll probably need a good 3-4 times the bandwidth we have now.

Google Docs is an "in the cloud" app and doesn't require any excessive amount of bandwidth. Neither will most other apps; they're just web pages to the user, and mostly text at that. Salesforce.com, one of the bigger cloud apps, is also mostly text. I'm not sure what you think is going to use up all this bandwidth.

Anyways most businesses pay by the 95th percentile of their usage. They're already metered. More bandwidth used = more profits.

Re:First post

[badkarmadayaccount]

Considering HPs love story with intel, more like $666,666,666.62985673957938579305887124145678902000239588212278 per PAR

What the summary doesn't say:

[Z_A_Commando]

This article was written two days ago! Dell and 3PAR both confirmed that as part of Dell's original merger agreement (and each successive agreement) Dell has the option to simply match any competing bids. This has hardly been settled, which you'd see if you RTFA.

Re:What the summary doesn't say:

[Lucas123]

Exactly. Nothing's changed from the numerous previous leap-frog bidding between HP and Dell for 3Par. Perhaps they should have people familiar with acquisition writing about them at PC Magazine.

Re:What the summary doesn't say:

[BBTaeKwonDo]

Why the dig on PC Magazine? TFA headline is "Sans Dell Match, HP Snaps Up 3PAR for $2 Billion". Sans is French for "without". TFA text continues with "...Dell still maintains the right to match HP's offer if it so chooses..." . So PC Magazine looks spot-on to me.

The fault lies with the Slashdot submitter, who submitted a bad summary to a 2-day-old article, and with Soulskill who accepted the misleading submission, and with you, Lucas123, for not understanding either TFA or the GP's point that TFA was correct.

Re:What the summary doesn't say:

[shoehornjob]

Unless the author of the PC magazine article was trying to make some funny(?) play on words (sans= multiple storqage area networks 3PAR data storage provider) Just sayin....aw never mind it was stupid anyway.

Re:What the summary doesn't say:

[Lucas123]

It's a lame story either way. The dig against PC Magazine is for writing something like it was news. There have been six bids for 3Par. What's different about this one? Nothing. It's simply the largest so far. So the headline, while not misleading, gives the reader the expectation that something different than past bids has occurred. It's the same as if when HP bid $1.6 billion last week, PC Magazine had written "Sans Dell bid, HP Snaps Up 3Par." Then when Dell submitted a counter offer writing, "Sans HP Bid, Dell Snaps Up 3Par."

Re:What the summary doesn't say:

[Anonymous Coward]

yup. wasn't actually "official" after dell declined to at least match hp's offer.... which dell announced they would not be doing on sept 2:

http://www.businesswire.com/news/home/20100902005854/en

Why?

[line-bundle]

Does HP really know what it's doing?

They paid too much and were in a gambler's frame of mind.

Re:Why?

[Anonymous Coward]

Michael must own 3PAR stock.

Re:Why?

[Anonymous Coward]

It's HP. Sense doesn't apply.

Re:Why?

[INeededALogin]

I usually fold well before I'm in for 2 billion.

Re:Why?

[TamCaP]

I was thinking the same thing. I have recently finished Graham's book "The Intelligent Investor", and buying a company for $2bn that has not even once generated any profit is like straight out of the chapter "what to watch out for". A very speculative move, especially by a company without a CEO. Not to mention that bidding is not yet completely over, right?

Re:Why?

[funkatron]

They paid too much and were in a gambler's frame of mind.

Gambling addict's frame of mind. This kind of bidding war is really not the way to win at gambling.

Re:Why?

[Dumass]

Maybe they're trying to push Dell into buying at a higher price?

Re:Why?

[phantomfive]

I don't entirely understand this. 3Par only has $200 million in revenue annually, and they aren't even profitable. They've been losing a million or so every year. So obviously it isn't about the money, it's about the technology: both companies think they can make a lot more money off the technology than 3Par has been.

But what is so great about 3Par? 3Par is making SANs, which is a growing, hot market, yes, but there are tons of small competitors in the space that have similar or better technology (as far as I can tell). If I were Dell, I would be smirking right now about how I'd made HP spend an extra hundred million they didn't need to spend, then go buy another small SAN company. In other words, I have no idea what HP is thinking (which doesn't mean they are dumb, just that I have no idea).

Re:Why?

[vlm]

So obviously it isn't about the money, it's about the technology

Sometimes mergers happen to eliminate the competition. If you axe a $200M competitor, you can probably increase your revenues more than $200M because less competition means higher prices for everyone... Sure they're not going to ten-tuple, but its not going to take $2B/$200M = 10 years to pay for itself. Maybe, like 5 to 7 years?

Also, sometimes a merger means patents etc that a cheapy competitor couldn't afford to enforce, can now be cashed in.

Re:Why?

[Anonymous Coward]

And what does an ink company know about SANs, anyway?

Re:Why?

[Anonymous Coward]

ask the investment banker who is advising the board (think bar-chart with near exponential increase in the length of the bars).
his motivation is that he will walk away with fixed fee (about 7%).
oh... one more thing.... the trading arm of the same investment bank is having a field day on 3PAR shares in the open market.

Re:Why?

[phantomfive]

That's a good point, and in some cases it is true, but I'm not so sure it is here. There are a lot of players in the SAN market, so that $200 Million isn't going all to HP or Dell. It's going to be spread out to a lot of different companies.

Also, I'm sure you realize this, but it's important to distinguish between revenue and profit. Yes $2B/$200M = 10 years, but they are also spending around $201M every year, so in the end, unless they improve the efficiency of the company, they will have made negative $10M at the end of 10 years. Not a good return on investment.

Re:Why?

[SQLGuru]

They've already raised the stakes (twice now). Of course, Dell only has to match their offer to "win". It's like a restricted free agent in football. Dell's initial offer included a buyout (I saw 70+ million somewhere) as well as a right to match any other offer.

Re:Why?

[Anonymous Coward]

At this threshold, I'd think it unlikely that they'll do anything other than say, "Hope that deal works out for you, HP..." and go on to some other company.

Re:Why?

[Anonymous Coward]

If you're just doing it to eliminate the competition, improving the efficiency is easy. Fire everybody.

Re:Why?

[Anonymous Coward]

The problem is that you're assuming fixed conditions, which are fine for math problems, but not so good in the real world.

Re:Why?

[shoehornjob]

Lack of leadership at the top maybe? Since they just fired the head honcho I don't know who's running the show. It seems to me that HP has always had issues though.

Re:Why?

[JPNielsen]

If either HP or Dell was trying to eliminate 3Par as a competitor then wouldn't their purpose have been served by simply letting the other buy them? Do you get into a bidding war to eliminate the competition? Patents would make sense though

Re:Why?

[bmwEnthusiast]

Perhaps there is a patent-folio that we are un-aware of that can crush all the little san mfg's. Just a thought...

Re:Why?

[shmlco]

3Par has technology and patents on "light provisioning" systems, that enables disk space to be allocated only when applications need capacity, greatly reducing IT management costs. Think of it as storage on a just-enough and just-in-time basis.

But basically it's because ex-CEO Hurd killed HP's R&D budget. With no R&D, HP is attempting to buy its way into the next big thing.

Hurd deserved to go. Killing off R&D to the point where you have to spend billions buying your way back into the game smacks of a certain lack of foresight and intelligence, does it not?

http://techcrunch.com/2010/08/29/behind-the-bidding-war-the-real-reasons-why-hp-and-dell-are-so-desperate-for-3par/?

Re:Why?

[Daetrin]

According to an article i read this morning (for which i haven't been able to find the link again, but still looking) 3PAR is the 4th largest player in the SAN market, and all three bigger players are part of much larger corporations that are out of Dell and HP's league. Furthermore cloud computing is projected to have twenty-something percent growth per year for the next several years, so any company in that area (which manages to survive anyways) is going to be worth a lot more a few years down the road than it is now.

However that same article wasn't sure the price of $2 billion made sense, and predicted that whichever company "won" the bid might suffer from some pretty severe buyer's remorse. It's not _quite_ as insane as it might appear at first, and it will take awhile to see if their gamble paid off or not.

Re:Why?

[baffle]

3PAR makes the best SAN I've ever touched. I use SANs from EMC, HP, IBM and NetApp; 3PAR wins hands down. Only feature I miss is NAS functionality like NetApp.

I think this was a wise move by HP, as long as they are able to keep key personnel in R&D and not fuck things up.

HP: Please bury EVA.

Re:Why?

[GaryOlson]

...keep key personnel in R&D and not fuck things up.

Not possible. My dealings with HP "Enterprise Sales and Service" will make any grown adult seek therapy. The damage done over the past decade to this company will take twice as long to correct. 3PAR as part of HP will be a sad day for the storage industry as innovation gets dispersed by blatant corporatacracy. 3PAR storage in the future will look like EVA in the present in a very short while.

Note to 3PAR: the wedding is about more than the cost of the ceremony.

Re:Why?

[Anonymous Coward]

Totally agree. Once HP touches it, it goes poof and you will never find it again. Great servers but everything else HP touches goes to dust.

Re:Why?

[Dogers]

I'd be interested in knowing who you think has better technology. 3PAR and Compellent are very close, technologically and I've not seen anyone else who has anything of the sort those two do.

Re:Why?

[phantomfive]

That's why I said 'as far as I can tell' :) I confess I am not an expert in this space, but there are a lot of companies that make SANs. I'm not sure how 3PAR does anything that is too much better. If you say so, it's probably true, but is it $1billion dollars better?

Re:Why?

[Dumass]

Exactly. HP puts up a higher offer, then if Dell is serious, they have to match it. It's a gamble since as AC says below, Dell can just walk away.

Re:Why?

[Anonymous Coward]

Perhaps HP is counting on Dell matching, with a kickback from 3Par?

Re:Why?

[Dogers]

It's certainly far better than anything else we'd looked at (EMC somethings & HP EVAs at the time). For me, 3PAR had the edge over Compellent, purely based on an ease of use and attitude of their sales/tech guys (they were very down to earth and honest about their produce. They claim this is their culture as they were founded by ex-Sun engineers).

3PAR and Compellent both do thin provisioning (give your servers 100Gb space even though you only have 50G real - add more disks as needed rather than repartition) and variable performance for specific disk areas (start your data out on SATA, use a specific bunch of files lots and it'll progress up to SAS, then up to SSD if it's continually used).

Everything else we saw was the old SAN way of "you want 300Gb RAID6? You need 4x 300G SATA/SAS/Fibre/SSD drives. Want to move it to another disk type later? Buy another 4 drives and move the data yourself". Really kinda crap in comparison!

We've still not bought anything to replace our old HP silos, but that's due to other projects. It'll certainly be one of HPAR or Compellents offerings - I'm guessing we'll lean HPAR, as we buy lots of HP kit already. I just hope HP don't ruin what appears to be an awesome thing!

Good move

[Anonymous Coward]

I am with Linus on this one.
I completely agree with what he says on this.

Making the Deal

[Herkum01]

Companies that do mergers are only able to make the aquistion work out about half the time, so it is rarely a good investment. If it is not good for the company then why does it happen?

Management often gives themselves bonus paychecks and golden chutes abound. I worked for Anthem (health insurance) when the CEO bought someone (forgot who) and he gave himself a $40 million bonus for completing the transaction. It will be the shareholders that get left holding the bag.

Re:Making the Deal

[crispy_one]

You know... "Snaps" and "$2 billion" seem a bit odd to see in the same sentence. That is quite the snap.

Re:Making the Deal

[Blackhalo]

"Companies that do mergers are only able to make the aquistion work out about half the time, so it is rarely a good investment."

Where else is that money going to go that would provide and equivalent improvement to revenue, earnings and share price (how XEOs get bonused)? With Treasury yeilds falling like a brick, and the currency and equity markets in turmoil, acquisitions are a no-brainer for boosting share-prices. Add in the facts that you get to keep a competitor from piking up a key element to their business plan, and they get to deflect some attention away from the questionable ouster of Hurd, it makes perfect sense.

Another News Item From Last Week

[Anonymous Coward]

Slashdot. is now Slashdot: News For Nerds Or Stuff You Can Read From CNN.

Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz.

Bye.

Re:Another News Item From Last Week

[vlueboy]

Slashdot. is now Slashdot: News For Nerds Or Stuff You Can Read From CNN.

No problem. All newspapers repost the same news from Reuters, AP and EFE at about the same time, and many users complain when the one they subscribe to "leaves them in the dark" on grounds of bothersome redundancy for any news, and might leave to a more "all-encompassing," redundant-ish source. Slashdot is doing us a services, since we don't all read your same other sites and few IT admins ever block slashdot.

Wasn't slashdot a site meant to TALK about techish news with tech people? Our tech subscriber base is broader and better informed than you'll find on random non-specialized sites. We can post hacks, opinion on the recent wikileak and pr0n related stuff freely here; because it would otherwise leave broadcast a trail through your Facebook account on CNN. Hey, you just posted Anonymously! try THAT on CNN and any chan-free board these days! :)

Re:Another News Item From Last Week

[Anonymous Coward]

Unlike CNN, Slashdot distinguishes itself with a lot of insightful analysis from ever possible angle here in the comments, along with a healthy dose of totally worthless drivel, like your comment.

HP : Offshore, now coming to 3PAR

[sethstorm]

Expect anything that is run in the US or the First World to be offshored. Until HP goes back to the old "HP Way", of course.

Re:HP : Offshore, now coming to 3PAR

[vlm]

Expect anything that is run in the US or the First World to be offshored. Until HP goes back to the old "HP Way", of course.

They spun the "old HP" into Agilent in an IPO like 11 years ago. It's not coming back.

As opposed to if Dell bought them? I'm thinking it doesn't matter which one purchases it, everyone may as well pack their desks.

Could it be true that regardless of which company bought 3PAR, the same folks in India would get all the jobs?

Re:HP : Offshore, now coming to 3PAR

[Anonymous Coward]

Too early to say that. We will see what they choose for the new CEO and what it will do.

Turd Sandwich vs. Giant Douche

[Anonymous Coward]

Gosh, so tough to choose... Maybe a computer science algorithm would help? Turing test?

Check the bid history

[Intron]

One could even say HP sniped the auction at the last minute

Bidder........Bid amount........Bid Time
  HP..........$2,000,000,000....Aug-08-10 11:59:59 PDT
  Dell........$39.95............Aug-08-10 10:37:14 PDT
  HP..........$34.95............Aug-08-10 10:18:22 PDT
  Dell........$24.95............Aug-08-10 9:45:12 PDT
  HP..........$19.95............Aug-08-10 7:06:23 PDT

Re:Check the bid history

[leromarinvit]

So HP bought the company for $40.95? What a deal!

eBay 101

[leromarinvit]

Someone needs to teach HP some basic eBay skills. A bidding war doesn't make sense if you're going to snipe anyway. The point of sniping is not letting anybody know beforehand that you're interested in the item!

Re:eBay 101

[Daetrin]

I hope you're joking. There's no such think as sniping in a bidding war like this. 3PAR _always_ has the option to go back to the other bidders and solicit another bid. In fact if you check TFA or some of the earlier posts, part of the Dell's initial bid included an agreement that they would be allowed to match any other bids tendered by other companies.

I'm really surprised that ebay hasn't come up with any kind of similar system. An option that could be chosen by the person auctioning the item where any bit within the last X minutes of the auction resets the timer back to X minutes to give others a chance to beat the new bid. It would probably make the sellers more money, and would eliminate a lot of the frustration on the part of the regular bidders.

3COM + 3PAR under one management

[Anonymous Coward]

Think of the synergy. Maybe they can get 3DO, too.

More details needed..

[Junta]

The article suggests that they patented over-committed storage. I don't see how that is unique or different. NetApp does this out of the box, you can make linux do this if you know what you are doing, VMWare, qemu, basically every virtualization solution enables over-commited storage, and many use data dedupe to automatically reclaim storage when images happen to converge.

I presume there has to be more to it than that, unless they think 3par did it before linux, solaris, and ontap did it, which I doubt...

IBM or not...

[Anonymous Coward]

IBM's storage is rebrand happy.

If it begins with DS, it's really just Engenio.

If it begins with N, it's really just NetApp.

If it begins with DCS, it's really DataDirect.

If it is XIV, it's really and truly IBM.

So chances are your SAN experience is just some other not-quite-so-big name in the market with IBM's logo slapped on and either some horrible Director integration attempt or the vendor's tools with IBM's logo on em.

IBM does do their own servers pretty much across the board, but they haven't exactly been growing original, in-house networking or storage efforts. Kind of a shame since a lot of really interesting stuff could be done if some vendor coherently implemented all the components as one.

IBM's apparent disinterest in 3par is due to some promising efforts out of their internal research devision.

Re:IBM or not...

[Anonymous Coward]

XIV was a separate company, IBM bought them too. I have a couple of them at work... the storage architecture is a lot like 3par.

Re:IBM or not...

[baffle]

Yes, I was mainly thinking about the Engenio rebrands, should have clarified that. DS4300/DS4700/DS4800. As you said N is just NetApp.

GPL Violation

[Anonymous Coward]

The funny thing about 3Par: the hardware they distribute has an embedded linux core, and they dont distribute the source to their kernel modules. Looks to me like the only thing HP bought was a GPL lawsuit waiting to happen.

3PAR Technology

[Anonymous Coward]

There is a reason why Dell and HP are willing to spend so much for 3PAR. Unlike all the other smaller SAN players, 3PAR has some great technology. They have their own custom ASIC that helps them beat the pants off all the smaller and larger SAN arrays. If you read the other articles, it looks like Oracle and Netapp where also trying to bid on 3PAR and may come back with offer. If so many of the top tech companies want this company, there is a lot more to it then meets the eye. I have bought an array from 3PAR and I am amazed at how easy they make complex SAN technology to use. In many ways they are similar to Apple. They have a simple and elegant implementation that just works and performs better then any of their competitors. Having worked for years with arrays from EMC, NTAP and Hitachi, I now understand why 3PAR is much better. All the others are complex and require weeks/months of training to use and maintain. 3PAR can be learned in less then 1 day and has performed better then anything else I have in the data center. Any time I have to do anything complex on EMC, NTAP or Hitachi, I have to pay ten of thousands or hundreds of thousands for professional services (PS). 3PAR is so easy to use they do not have a PS group. Like many small companies, the problems they have are related to size that the buyout will solve those. Like one of the previous comments stated, if these guys ever get around to doing a NAS, watch out. If either HP or DELL win, watch out since they will have size to go after EMC, NTAP and Hitachi. I bet in 1 to 2 years, EMC, NTAP & Hitachi hardware revenue will go down as these guys finally will have the money to go win a huge footprint.

HP is going to regret this.

[Anonymous Coward]

HP is going to wish they didn't make this decision. Five years from now...such a purchase will be irrelevant. This so reminds me of Time Warner's purchase of AOL.