HP has $2.7 billion to buy 3COM

Posted by Emory Kale

The Wall Street Journal reports that HP is going to buy 3COM for $2.7 billion. Not only does 3COM make HP even bigger and more powerful, but it also opens up the Asian market, one of the fastest growth areas left in these dire times. With this acquisition, HP goes head to head with yet another of the big corporate computing giants, Cisco, becoming a one stop shop for everything from networks to servers.

So, there you have it, IBM, HP, Cisco, and Dell are sitting at the edge of the arena, armed to the teeth and ready for battle. HP had previously bagged EDS; Cisco had recently picked up Tandberg; Dell picked off Perot Systems. A tightening technology market always leads to consolidation, but at this point, there is probably no going back to the diversity of the old days.

However, according to the WSJ, not everyone is into consolidation:

"Not all tech giants are moving toward the one-stop shop, however. Motorola Inc., which is grappling with how to position itself amid tough competition, is trying to get out of the networking-gear market by attempting to sell off that division of its business, for instance. And several years ago, IBM sold its PC unit to Lenovo Group Ltd."

On a more sinister note, according to AOL's Daily  Finance blog, the news of the deal may have leaked out prematurely:

"There was an abnormally massive spike in activity for November and December call options, which would give the holder the right to buy 3Com shares at $5. The stock was up 35% in after-hours trading to $7.65, meaning that someone who exercised the option could have realized a 35% paper gain in a matter of hours."

HP CEO, Mark Hurd, has been gaining kudos for his cost cutting and growth strategy. Sadly, there is a sense of computing history slipping away, and maybe more tech jobs, and lord knows we don't need any more of that kind of thing. 3COM was founded by Robert Metcalf, the inventor of Ethernet, and has 9,200 employees dotted around the globe.