

Hewlett-Packard to Acquire 3Com for $2.7 Billion - asnyder
http://www.nytimes.com/2009/11/12/technology/companies/12hewlett.html

======
steveplace
That news was soooo leaked before hand.

Here's the stats on the option board today:

\- 8085 calls traded, 6 puts traded

\- 95% of those calls were bought on the ask

\- Open interest for the entire board was 13k, so very unusual.

\- Around noon, we had buys go at the offer (to open) for 3k Nov 5 calls and
~3k Dec 5 calls.

Nice chunk of change for an overnight trade.

~~~
joseakle
I'm sorry but i don't understand what it all means, would you care to explain?

~~~
steveplace
Sure.

Say there's a stock, and on average it trades 100,000 shares per day. And then
one day, we see large orders, someone actively buying shares on the offer,
about 450,000. And then the day after the stock jumps up on being acquired.
The odds are very high that someone new ahead of time.

The same thing happens in the options market. The COMS options market is
relatively dull. It doesn't trade much, and there are not that many contracts
open. Then all of a sudden a player goes out and buys 6,000 calls, half of
which expire in 10 days. These contracts give them the right to buy COMS at $5
a share.

The volume traded today was about 17x normal, and these contracts were bought
to open.

So at 12PM a trade came out and bought 3800 Nov 5 Calls for 0.65. They also
bought 3100 Dec Calls for .80. I'm sure this wasn't a calendar spread as the
November calls were bought not sold.

So someone put about 500k down on a very speculative bet. And now the name is
up 35% aftermarket.

Not including any premium, the contracts are now worth about 2.70. So they
made about 1.5M, or a 300% return overnight.

Anyways, I just laid out the premise for an SEC investigation (and hopefully)
prosecution. If they don't they're either cowards or stupid.

~~~
paraschopra
Thanks for explaining. Where did you get the information/data about this?

~~~
steveplace
livevol.com

------
BobbyH
It seems like Cisco basically forced HP to compete with its high-margin
network gear business, since Cisco moved into HP's server territory earlier
this year
([http://www.nytimes.com/2009/01/20/technology/companies/20cis...](http://www.nytimes.com/2009/01/20/technology/companies/20cisco.html)).

It looks like attacking a competitor's cash cow often results in the
competitor attacking _your_ cash cow?

~~~
SwellJoe
I'll be curious to see how it shakes out for each of them. It seems to me,
from my admittedly ignorant view, like opening the Russian front was to
Germany for _both_ HP and Cisco. I suspect it's going to hurt both of them in
the end, maybe to a significant degree. HP isn't really the clear leader in
their space, though, but Cisco has so little history and mindshare in the
server space that it seems like a pretty evenly bad idea on both sides.

I don't know who will eat into Cisco market share when they make mistakes or
spread themselves too thin, but I'm sure that Dell is ready to step in
whenever HP makes mistakes or loses focus (as has been happening for years).

Anyway, I believe saying Cisco forced HP to do this isn't quite accurate. The
other option for HP might have been to double down on their own strengths, and
just kick ass while Cisco tries to figure out how to crack a market where they
have no brand awareness (a Cisco is a router...everybody knows that...would
you buy a roll of Kleenex paper towels?). Cisco could very easily spend
themselves out of the running, since they'll have to spend a lot more on sales
and brand awareness for their server line than HP will for the same impact.
Even if Cisco is a better run company, which I do believe is true, they're
signing on for an uphill battle.

~~~
CamperBob
HP can now sue practically everybody else in the market sector for infringing
on what must be the mother lode of networking patents.

~~~
SwellJoe
You don't think it would be a MAD situation to sue Cisco over networking
patents?

------
tptacek
hdmoore: HP plans to buy 3Com ($2.7b), which owns TippingPoint, which runs ZDI
[Zero Day Initiative, a market for zero-day vulnerabilities], which has a
1128-day [vulnerability] in HP products.

"Maybe it was cheaper to buy them than fix all the bugs". (rim shot!)

------
ciupicri
I wonder what will happen with the 3Com brand, because IMHO 3Com > HP when it
comes to networking. I suppose that it will disappear, but after how long? For
example the Thinkpad brand still exists even if it was bought by Lenovo some
years ago, while the Compaq brand wasn't used too much.

~~~
wmf
I wonder if the 3Com brand is worth anything these days. I haven't heard
anything interesting from 3Com in years; the switching market is dominated by
Cisco/Juniper/ProCurve/Brocade/Extreme and even smaller newcomers like Force10
seem to get more attention than 3Com.

~~~
zackattack
Yeah, it's not like any 49ers fans are worried.

------
SwellJoe
I held 3Com through a couple of years of steady decline back in the late '90s
waiting for it to make a dent in Cisco. It never did, and I lost more on it
that I've ever lost on any other stock. I don't have much confidence that HP
management can alter that situation in any significant way. But then, I don't
have much confidence in HP management since the Compaq merger, or even a few
years before.

------
sireat
The price seems rather "cheap", I didn't realize 3COM had fallen down so low.

