You are telling me that companies are bidding $$ billions for a company that barely makes $1 million in revenue a quarter?
Talk about a stupid investment.
Dell reportedly plans to raise its bid for 3Par after Hewlett-Packard offered $1.6 billion for the storage firm.
On Monday, HP offered $24 a share for 3Par. On Aug. 16, Dell offered $18 a share. The real kicker is that 3Par closed at $9.58 on Aug. 13.
Reuters reported that the Dell offer was on deck. Fund managers surveyed by Reuters expected the final 3Par price to be about $29 a share.
What may emerge from this bidding war is a serious case of buyer’s remorse. In bidding wars, there’s a “winner’s curse” where the victorious company overpays.
As previously noted, 3Par’s financials don’t back up the heady valuation. 3Par in its most recent quarter delivered revenue of $54.3 million with net income of $1.01 million. Those fiscal first quarter results met expectations.
For fiscal 2011, 3Par is expected to deliver revenue of $235.3 million, up from $194.3 million in fiscal 2010.
However, there’s a dearth of storage companies left to acquire so Dell and HP are willing to pay up for 3Par.
