Hewlett-Packard buys 3Com for $2.7B; ups guidance

Hewlett-Packard Co. ’s 2.7 billion U.S. dollars takeover of 3Com Corp. is a shot in the networking market leader Cisco Systems Inc. – and a sign of how the old relations were frayed by a series of maneuvers by tech heavyweights.
HP announced on Wednesday it has agreed to pay over $ 7.90 per share for 3Com, has a premium of 39 percent to the closing price of 3Com before the deal was announced. 3Com does things like routers and switches that direct Internet traffic and other data.
HP also increased its 2010 guidance and reported preliminary results that beat Wall Street estimates. The Company has no specific reasons for the better perspective than another statement from CEO Mark Hurd that “strong growth in China” and “solid performance” helped HP in the quarter.
3Com acquisition represents the latest attempt by HB 1, the first PC maker to expand into more profitable areas of the PC. The HP PC business with approximately one third of total company revenue in the last nine months, but only 17 percent of operating earnings.
One area that HP looked at the computer network, a market dominated by Cisco.
“Every client has asked me to speak to us to more networking,” said David Donatelli, Executive Vice President of HP’s enterprise servers and networking group.
HP has tried to muscle remains on lawns of Cisco, with its ProCurve line of networking gear, which is grown, but a very small company, HP. Add 3Com strengthens the HP offer networking, and gives a stronger presence in China. More than half of 3Com revenue of $ 1.3 billion years comes from China.
The agreement also means HP is in more areas against Cisco, which has decided against the life-long partners like HP and IBM with a push on the server store competition fit.
The features show how the largest companies that provide IT infrastructure of companies are consolidating rapidly in his bid to become one-stop technology.
3Com takeover is when HP is still digesting the 13.9 billion U.S. dollars acquisition of Electronic Data Systems Corporation, a company whose Addendum HP Technology Services Group, the company increased its revenue and profit. The deal was a shot of a sign of IBM and HP wanted a bigger piece of the service companies, the key to the transformation of IBM from the brink of collapse in the 1990s.
HP, which is cutting 24,600 jobs as part of its acquisition of EDS, did not work out, whether it be layoffs at 3Com, which has 5800 employees worldwide.
HP shares fell 32 cents to $ 49.68, while the share of 3Com jumped $ 2, or 35.2 percent, to $ 7.69 in trading after the announcements.
Co-founder, Robert Metcalfe, the inventor of a widely used standard Ethernet networking, 3Com is a former high-flyer, whose business grew over the 1980s and 1990s stalled, but after the dot-com crisis. The company’s stock briefly topped $ 100 in 2000, but languished in recent years, under $ 5.
HP takeover comes after 3Com, in Marlborough, Massachusetts, tried, and not from the sale to Bain Capital Partners, the private equity firm and a Chinese partner, Huawei Technologies Co.
The agreement broke down in the past year for reasons of national security. The MPs said they were able to be transferred to China of sensitive military technology in question. A stumbling block appeared to be 3Com Tipping Point subsidiary, which makes network security software.
The dynamics of consolidation plays in the world of technology.
An example is the database leader Oracle Corp. ’s proposed acquisition of 7.4 billion U.S. dollars, Sun Microsystems Inc., 4 the second largest manufacturer of servers behind IBM, HP and Dell Inc. The agreement was approved in the U.S., is carried out on antitrust concerns in Europe.
Others include Dell Inc. ’s 3.9 billion U.S. dollars of the recent acquisition of Perot Systems Corp. and Xerox Corp.’ s 6.4 billion U.S. dollars takeover of Affiliated Computer Services Inc.
HP preliminary report for the three months ending in October showed the company in Palo Alto, California-based earned 99 cents per share, compared with 84 cents in the year-ago period.
Adjusted for restructuring and other items, HP earned $ 1.14 per share. Sales fell by 8 percent over the same period of last year to 30.8 million euros. Both measures HP was better than Wall Street expected, according to a survey by Thomson Reuters.
HP said it now expects that fiscal 2010 sales of $ 118 million to 119 billion dollars, slightly up from an earlier estimated range of $ 117 million to 118 billion U.S. dollars. Time charges net income is up to $ 3.65 excluding $ 3.75 per share, or $ 4.25 to $ 4.35 per share.
HP is to his 23. November full results