Brocade has been the subject of acquisition rumors for about a year now, despite denials from its CEO Mike Klayko that it is for sale. No acquisition talk came up Wednesday during the vendor’s three-hour analyst day webcast, as Brocade executives tried persuading analysts and investors that the company is on its way to boosting its struggling Ethernet business while remaining a Fibre Channel networking powerhouse.
But that didn’t stop at least one analyst from playing matchmaker. Kaushik Roy of Wedbush Securities sees Brocade as a good fit for Dell. Dell’s rival Hewlett-Packard bought Ethernet networking vendor 3Com earlier this year and then outbid Dell for storage systems vendor 3PAR. There has been a lot of speculation that Dell would look for another target after failing to match HP’s final $2.35 billion offer for 3PAR.
“We believe that Brocade is an attractive acquisition candidate and its stock is cheap,” Roy wrote in a research note today. “Dell is following on the footsteps of HP and we think that acquiring Brocade would give Dell access to storage and data networking, important components of the data center.”
Brocade would give Dell something HP lacks — its own Fibre Channel networking products. Dell and HP both sell devices from Brocade and Cisco through OEM and reseller deals. HP was believed to be a suitor for Brocade last fall until it bought 3Com, but is unlikely to chase Brocade now just for its FC business.
NetApp and Oracle today dropped their lawsuits against each other, ending their three-year legal scuffle over patents related to ZFS.
NetApp issued a release saying both sides agreed to dismiss their suits, but kept terms of the agreement confidential.
“For more than a decade, Oracle and NetApp have shared a common vision focused on providing solutions that reduce IT cost and complexity for thousands of customers worldwide,” NetApp CEO Tom Georgens said in the release. “Moving forward, we will continue to collaborate with Oracle to deliver solutions that help our mutual customers gain greater flexibility and efficiency in their IT infrastructures.”
The lawsuits go back to before Georgens was NetApp’s CEO and before Oracle had anything to do with ZFS. The dispute actually began in 2006 when ZFS Sun accused NetApp of violating Sun patents. NetApp then sued Sun for patent infringement in Sept. 2007, and Sun counter-sued a month later. Oracle inherited the suits when it acquired Sun this year, with litigation still pending. Oracle and NetApp began working on an out-of-court settlement soon after the Oracle-Sun deal closed.
There was collateral damage, too. In May, Coraid pulled its EtherDrive Z-Series NAS after NetApp claimed the product infringed on its ZFS patents and threatened to sue. Coraid has not yet said if the settlement means it can resume selling the Z-Series.
EMC executives have been touting the low-end midrange storage system they intend to launch early next year, talking it up on the company’s last earnings call last month and at an investors’ conference this week.
And documents like this about a Celerra NX3e NAS and iSCSI system are making the rounds. The NX3e, according to documents, is “storage for IT generalists — not storage managers.” But EMC people say the NX3e and the new midrange system are not the same, although they may be distant cousins.
In a terse post today, EMC blogger Storagezilla asked himself the question of whether the NX3e is the system CFO David Goulden talked about at the CitiGlobal Technology Conference this week.
His answer: “No that isn’t it. See you in 2011.”
It turns out the NX3e isn’t new, it’s just been geographically limited, according to an EMC spokesman who responded to my query.
“The Celerra NX3e is an IP storage solution that was released in a limited fashion last year,” the spokesman wrote in an email. “It is a channel-only product that is available only in Sweden, Denmark, Norway and Finland for the SMB market. … The ‘e’ emphasizes entry level and the online ‘experience’ for our partners and end users, including ease of installation, configuration and use, and a new online portal for support.
“This is the first of ongoing efforts to address customer needs in this fast growing segment of the market and, as was previously reported, look for details of new offers in early 2011.”
At the CitiGlobal conference, Goulden said the new low-end midrange system would cost in the $10,000 to $75,000 range and would have many capabilities found in higher end Clariion or Celerra systems. But a lot of lower-end midrange admins would probably appreciate some of the features of the NX3e — especially if EMC makes good on its claims made in the NX3e literature, such as:
“No more storage jargon, like LUNs and RAID groups. No more cumbersome and confusing configuration processes.”
So, Dell’s latest offer for 3PAR turned out to be a last-chance hope to land a haymaker rather than an indication of Dell being in the chase for the long haul. About an hour after 3PAR revealed it received new offers from Dell and Hewlett-Packard, Dell threw in the towel. The vendor issued a statement saying it would not try to match HP’s latest bid of $2.35 billion.
“We took a measured approach throughout the process and have decided to end these discussions,”
Dell senior vice president of corporate strategy Dave Johnson said in the statement.
Dell is entitled to a $72 million break-up fee from 3PAR under terms of their Aug. 16 agreement, and HP will acquire 3PAR unless another company makes an unlikely bid.
HP’s winning bid of $33 per share means 3PAR’s stock price more than tripled from $9.65 since Dell’s first offer less than three weeks ago.
Dell’s latest offer of $32 per share was revealed today by 3PAR, which determined HP’s counter was a superior proposal.
Now there is speculation that Dell will look for another storage acquisition instead. Shares of storage systems vendor Compellent, backup software vendor CommVault, and switch maker Brocade all rose today as shareholders anticipate a buyout.
Now it looks like the battle for 3PAR will turn into an old-fashioned 15-round bout between Hewlett-Packard and Dell. Neither 3PAR suitor backed down today, as they each made their fourth bid for 3PAR. At the end of the latest bidding round, HP’s had the highest offer of $33 per share or $2.35 billion. Still, Dell kept its right to match any bid for 3PAR.
3PAR today said that after it told Dell of its plans to terminate its merger agreement to accept HP’s previous offer of $30 or $2 billion, Dell raised its offer from $27 to $32 per share with a termination fee of $92 million. HP then raised its bid to $33 per share.
Dell’s offer was good enough to at least prevent 3PAR from terminating the Aug. 16 agreement between the two, and 3PAR’s board must continue to recommend its shareholders accept Dell’s latest offer. However, 3PAR immediately deemed HP’s $2.4 billion off a “superior proposal,” and gave Dell another three business days to respond.
There was a twist to Dell’s latest offer. It proposed a multi-year reseller deal with 3PAR that any acquirer must honor. 3PAR said the offer also included price fixing and other terms that its board determined unacceptable. 3PAR did not give details on the “other terms.”
3PAR’s stock price has more than tripled from $9.65 since Dell’s first offer on less than three weeks ago.
“The journey to the cloud begins here,” says the sign on the giant EMC booth at VMworld. But Virgina residents these days see EMC as more of an inhibitor of travel than an enabler of journeys.
The Virginia Information Technologies Agency fingered EMC as the culprit in a glitch that brought down systems across state agencies. The Virginia Department of Motor Vehicles was one of those agencies, causing the state to stop issuing driver licenses since last Thursday.
VITA has been updating its website with news on the problem, placing blame on its EMC DMX-3, which is part of EMC’s enterprise Symmetrix storage platform. EMC seemed shocked by the failure, at least according to the way VITA put it on its site:
”According to the manufacturer of the storage system, the events that led to the outage appear to be unprecedented. The manufacturer reports that the system and its underlying technology have an exemplary history of reliability, industry-leading data availability of more than 99.999% and no similar failure in one billion hours of run time.”
VITA said today that the faulty DMX-3 has been fixed and the agency is testing it, but driver licenses are not yet being processed. The failure impacted 26 of 89 state agencies, including core business functions of three agencies. The outage affected 13% of the state’s file servers, according to VITA.
This isn’t EMC’s first high-profile failure this year. Exchange hosting provider Intermedia blamed EMC for a hardware failure that interrupted service in April. Intermedia did not say which EMC storage system failed, or if that system also has a history of going a billion hours without run time.
BlueArc has used Ocarina Networks’ add-on primary dedupe product for archival data, but picked Albireo for primary data after Dell acquired Ocarina. BlueArc senior director of solutions marketing Ravi Chalaka said the vendor will license Permabit’s software and make it available for all of its NAS systems.
“We chose Permabit because we wanted zero impact on performance,” Chalaka said. “We saw Permabit could maintain high performance while reducing the amount of disk it writes to.”
Chalaka said BlueArc will ship primary dedupe sometime next year as a licensed feature with its NAS but no decision has been made on pricing. He said OEM partner Hitachi Data Systems has yet to commit to using Albireo on the BlueArc systems it re-brands.
“Clearly, primary deduplication is here to stay,” Chalaka said. “Around 70 percent to 80 percent of our customers expect to see it by the end of next year.”
Storage array vendors have been busy developing or buying primary data reduction technology. Besides the Dell-Ocarina deal, IBM acquired primary compression vendor Storwize, EMC launched block compression for primary data on its Clariion and Celerra storage systems and Hewlett-Packard said it would expand its StoreOnce backup dedupe to primary data. NetApp already ships deduplication for primary data on its FAS storage arrays.
Permabit CEO Tom Cook has claimed the dedupe provider will make many OEM announcements in the coming months for Albireo.
After a flurry of bids for 3PAR late last week, Hewlett-Packard and Dell took the weekend off but 3PAR had something to say about its fate.
3PAR Friday night issued a statement saying its board determined HP’s $30 per share $(2 billion total) offer made that morning was a superior proposal to Dell’s most recent offer, and it notified Dell that it would terminate its merger agreement after three business days. Dell still has the right to match the HP offer to extend the merger agreement.
Dell’s latest bid was $1.8 billion Friday morning, which HP promptly raised to $2 billion. That brought the number of bids last week to five from Dell and HP, and the $2 billion offer was the sixth for 3PAR in two weeks.
With HP’s latest offer representing a 211% premium to 3PAR’s stock price before Dell made its first offer of $1.15 billion Aug. 16, we don’t expect many more bids for 3PAR. The battle should be winding down, and we look forward to a winner emerging this week. It could happen by tomorrow if Dell declines to increase its bid.
The bids are coming in rapidly for 3 PAR. 3PAR barely had time to digest Dell’s $1.8 billion offer this morning before Hewlett-Packard raised its offer to $2 billion.
Storage Systems vendor 3PAR has now received four bids in two days and six in two weeks with Dell and HP making three offers apiece.
Dell disclosed this morning that it would match the $1.8 billion offer HP made Thursday evening. 3PAR was obligated to accept that offer under terms of its original agreement with Dell that gives Dell the right to match competing bids. Dell opened the bidding at $1.15 billion Aug. 16, and HP bid $1.6 billion on Monday. On Thursday morning, Dell raised HP’s bid by $20 million and HP countered with its $1.8 billion bid after the market closed.
3PAR’s board has accepted all of Dell’s offers and none of HP’s, which seems to indicate 3PAR management favors Dell. However, 3PAR has to accept any matching bid due to its original agreement with Dell. That agreement also allows 3PAR to negotiate with any company that makes a superior offer. That means HP – or another company – can win even if 3PAR management prefers Dell. 3PAR is legally bound to send any superior offers to its shareholders, who will ultimately pick the winner.
Hewlett-Packard didn’t wait long to counter Dell’s counter offer to buy 3PAR. HP made a new bid of $27 per share after the market closed today, an 11% improvement on Dell’s pre-market offer of $24.30 per share or just over $1.6 billion.
Dell started the bidding with a $1.15 billion offer Aug. 16, and HP offered $1.6 billion Monday.
3PAR accepted Dell’s offer this morning, but hasn’t responded to HP’s bid. Dell’s revised agreement today increased the termination fee to $72 million that 3PAR must pay Dell if it accepts another offer. The previous termination fee was $53.5 million. Like its first offer, HP’s new bid did not include a termination fee.
At least one financial analyst who follows the storage industry predicted HP’s latest bid will be the winner.
“We believe it is now less likely that Dell will return with a competitive bid for 3PAR and would reiterate our prior stance that we have believed that HP would ultimately win this bidding war,” Aaron Rakers of Stifel Nicolaus Equity Research wrote in a note issued after HP’s second offer.