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  5. Pros And Cons Of HP's ArcSight Acquisition: Page 2 of 2
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Pros And Cons Of HP's ArcSight Acquisition: Page 2 of 2

Having just outbid Dell for 3Par by more than doubling the initial agreed-upon price--$2.4 billion versus $1.15 billion--HP is back at it, offering $1.5 billion for ArcSight Inc. According to analysts, HP paid a very stiff premium to outbid Dell, more than 14.9x 3Par's book value, 342.3x its cash flow and 10.1x its sales. Based on ArcSight's latest financial results, HP is again paying top dollar to expand its security portfolio. Its fiscal first quarter ended July 31, 2010, and ArcSight report
September 13, 2010

Shipley notes that two previous SIEM deals, Cisco buying Protego in 2004, and Symantec's acquisition of Mountain Wave in 2002, didn't pan out. "ArcSight is, of course, a much more mature company than Mountain Wave or Protego, but it will take some time before we can judge whether or not the HP umbrella is a good one for ArcSight and its customers."

Another element to bear in mind, adds Enderle, is ArcSight's reliance on Oracle technology. If HP's war with the database giant continues, HP will have to repoint this to Microsoft or SAP/Sybase. "This could be an opportunity for one or both of those companies."

Finally, Enderle thinks this rush of acquisitions in the post-Mark-Hurd era could just be the beginning. He says Hurd didn't like acquisitions, which "dramatically limited" HP's ability to buy valuable properties during a time when many of these properties are undervalued. "HP now has nearly five years of analysis of properties they have vetted but couldn't buy. I'd anticipate a number of additional purchases in the coming months as a result as they blow through this backlog."

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