HP Completes 3Com Acquisition, Product Road Map To Come


Hewlett-Packard Monday confirmed it had completed its planned acquisition of 3Com for about $2.7 billion, or $7.90 per share in cash. HP didn't disclose plans for how it will integrate 3Com's products or channels into its own portfolio, saying in a statement that those details will come "at a later date."

Among scant details, HP confirmed that 3Com's network switching, routing and security products will become part of HP ProCurve. In a statement, HP also noted that the acquisition of 3Com gives it a much stronger position in China, bolsters its network security offerings thanks to 3Com's TippIngPoint line, and adds to what it can bring to market for Ethernet switching products.

The acquisition was approved by China's Ministry of Commerce late last week, the last of the transaction's regulatory hurdles, according to a Form 8-K filing with the Securities and Exchange Commission from 3Com dated April 7.

HP first announced the acquisition on Nov. 11. At the time, VARs told ChannelWeb that the addition of 3Com would significantly add to what HP and its ProCurve unit can provide to customers and the channel, especially as it squares off against Cisco for network and data center dominance.

One big question from solution providers is how HP will deal with the significant overlap in 3Com's portfolio with its own. They also question how HP will work in the TippingPoint solutions, 3Com's "unpolished jewel" of a voice portfolio, and its low-end, OfficeConnect line that's seen as a potential competitor for Cisco's Linksys and small-business brands.

The memories of 3Com's recent channel strife and rocky 2008 are also fresh in the minds of many VARs. In 2008, 3Com channel chief Nick Tidd exited the company and a planned merger with Bain Capital partners went bust. At that point, 3Com dismissed then-President and CEO Edgar Masri, replaced him with board member Robert Mao, and set about restructuring its channels and enterprise business in late 2008 and into 2009.

3Com's most recent 10-Q filing with the SEC referenced a few accounting changes and a potential termination fee -- now immaterial -- if the HP acquisition were to fail.

3Com also discussed new sources of competition from formerly strategic partner Huawei, which according to 3Com might be looking to sell its own gear into 3Com's H3C installed base. According to reports, sales of 3Com gear through Huawei in China have been steadily declining.

"If, as expected, Huawei Technologies, or Huawei, continues to significantly reduce its business with us, our business results will be materially adversely affected if we cannot increase other business to offset the decline," wrote 3Com in the 10-Q filing.