How did HP beat Dell in 3PAR bid? (2)

14:18, September 03, 2010      

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Beyond that, 3PAR's storage capabilities emphasize another growing trend in the IT sector: virtualization. While cloud computing focuses on shifting operations and storing data remotely online, virtualization uses software to simulate processes traditionally handled by hardware, enabling companies to realize greater IT efficiencies.

"Virtualization is already proven in the marketplace -- customers have already bought into the benefits -- so that's ready money. Cloud computing is a more distant goal for customers and vendors alike but cloud computing leverages virtualization, so there is a direct path between the two," explained Rajan Chandras, a contributing editor at, in an interview with Xinhua.

While both companies have the cash to afford the purchase, Dell and HP's rapid bid for 3PAR has left many investors wary.

On Tuesday, credit rating agency Standard &Poor (S&P) downgraded its rating for Dell stock from hold to sell on grounds that Dell would continue to counter HP's offer, which at the time, stood at two billion dollars, or 30 dollars per share.

Since HP first threw in its first bid on Monday, August 23 at an enterprise value of 1.6 billion dollars, the stock began to trend slightly downwards, especially as bidding intensified.

"It seem(ed) like both Dell and HP are overpaying for 3PAR. HP having deeper pockets means both lesser financial impact on account of the cost of acquisition in the short run, and less pressure to deliver results in the medium range," said Chandras, who also works as a senior consultant for a global IT consulting, systems integration, and outsourcing firm.

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