HP coughed up pocket change – $2.7 billion — to buy 3Com.  Expect lots layoffs at 3Com in the future.

Analysts are trying to spin this as HP takes on Cisco since 3Com has Ethernet switches and some routers. The deal also gives HP a [...]]]>

(LMADotD – “Let’s make a deal” of the day)

HP coughed up pocket change – $2.7 billion — to buy 3Com.  Expect lots layoffs at 3Com in the future.

Analysts are trying to spin this as HP takes on Cisco since 3Com has Ethernet switches and some routers. The deal also gives HP a bigger footprint in the Chinese market; 3Com has a 30 percent share there — not bad for a market expected to continue to grow.

HP will get some voice/VoIP technology to add to the portfolio, but seriously, if HP wanted to boost its telephony portfolio, they should have bought Polycom.

Back in 2007, 3Com tried to sell itself to Bain Capital and Huawei for $2.2 billion, but the detail got shot down in March 2008 by the U.S. government due to security  interests.

Brocade is currently feeling bummed out because HP was in talks to buy it, so they’ll take a stock hit.

Analysts say the purchase of 3Com’s deal gives HP the number two position in terms of network gear, but there’s a long road to travel before Cisco starts to break a sweat. Cisco has 70 percent of market share in terms of revenue, while a combined HP and 3Com have a 10 percent share of revenue.  As for units shipped, Cisco shipped 54 percent and HP/3Com have a 40 percent share….

Being an IP bigot at heart, the router is at the core of the network and you can’t really say that 3Com is a household name for routers, especially at the high-end.  If HP is really serious about networking gear, it will buy/merge with Juniper Networks.