Sunday, August 29, 2010

Is "3PAR frenzy" a 3-ring circus?

On August 18, data storage firm 3PAR, Inc. (US: PAR) traded at $9.65 a share which valued the firm at about $600 million. On August 20, a bidding war started between Dell, Inc. (US: DELL) and Hewlett-Packard (US: HPQ). This process has driven the company's value up to $2 billion.

MY TAKE: The technology industry buzz is that personal computers are in decline and that "cloud computing" (is this a fancy term for "time sharing"?) is where the action is. Given that 3PAR's revenue for the past four quarters totals about $97 million, understanding the business leverage to be achieved from this transaction may be a challenge. In the short term, one of the big winners from this deal is 3PAR's advisor- Qatalyst Partners led by Frank Quattrone. Is the frenzy associated with this deal based on a brilliant strategy, a bubble or corporate "dumb and dumber" syndrome? - only time will tell.

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