Michael Dell, founder of Dell Inc., said Hewlett-Packard Co. overpaid for storage company 3Par Inc. in September and he made the right decision in dropping out of the takeover battle.
“We showed a good discipline and didn’t take an emotional decision,” Dell, 45, said in an interview today at the World Economic Forum in Davos. “I think HP paid way too much for 3Par,” particularly considering the price Dell paid for Compellent Technologies Inc., the data-storage company Dell bought in December for $960 million, he said.
HP, the world’s biggest PC maker, agreed to pay $2.35 billion for 3Par, more than triple the business’s market value, after an 18-day bidding war against Round Rock, Texas-based Dell. The Compellent price was 56 percent more than Compellent’s closing value on Oct. 25, the day before Reuters reported the company was considering options including a sale.
In response, HP Chairman Ray Lane said today that Michael Dell came pretty close to the final price paid for 3Par.
“He was willing to pay just under what we paid,” said Lane, who was also attending the economic forum. “He went all the way up to almost what we paid.”
The 3Par deal was clinched before Lane became HP chairman.
Dell is using acquisitions to reduce its dependence on the desktop and notebook market, where profit margins typically are lower. Compellent technology helps customers store, recover and manage large amounts of data. About 3.5 percent of Dell’s $15.4 billion in sales last quarter came from storage products.
“We are looking at more acquisition opportunities in software, data centers, cloud computing, storage and virtualization,” Dell said.
Several of Compellent’s peers were acquired this year. IBM bought Netezza Corp. in November, and EMC agreed to buy Isilon Systems Inc. the same month.
People are increasingly tapping into software and content via the Web, using so-called cloud-computing services, boosting demand for data centers that store the content.
This trend and the popularity of social media are boosting some technology companies’ valuations.
“There’s a fairly striking disconnect between the valuation of established tech companies and the newly emerging ones,” Dell said. “The market will figure it out.”