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Summary:

Computing giant Hewlett-Packard said today it would spend $360 million in cash to buy LeftHand Networks, a storage company that straddles two hot trends right now — allocating storage for virtualized servers and the using Ethernet for storage networks. LeftHand’s software essentially allows a user to […]

Computing giant Hewlett-Packard said today it would spend $360 million in cash to buy LeftHand Networks, a storage company that straddles two hot trends right now — allocating storage for virtualized servers and the using Ethernet for storage networks. LeftHand’s software essentially allows a user to create a storage “cloud” connected via iSCSI, an Ethernet standard rather than the proprietary Fibre Channel networking that dominates the storage industry. The software could run on IBM and HP servers.

Storage is gaining in prominence among customers of the big computing vendors as the amount of data stored on corporate desktops rises.  Additionally, more of the stored data is unstructured, rather than stored in a database, making it hard to access and analyze with a computer. Unstructured data includes things like video files and the texts of emails and chats. Earlier this month IBM launched 30 new storage products built in part from some $2 billion in acquisitions it had made within the last few years.

The LeftHand buy mirrors a similar deal made by Dell last year when it paid $1.4 billion for EqualLogic, which also made iSCSI-based storage software for mid-sized companies. LeftHand had trailed EqualLogic in sales, but I wonder if the comparatively low price is a reflection of the grim exit market’s depressing valuations. Back in 2007, EqualLogic was planning an IPO, which may have prompted Dell to pay more (about 25 times revenue) to make its offer more compelling. LeftHand had no such threat to boost its price.

  1. I also commented on this press release, we always knew it was a question of when HP would pull the trigger, not “if”.

    http://thesantechnologist.com/?p=135

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  2. This is a hot area, and I suspect it will continue for the next five years. Large datacenters can save a bunch by moving to utility computing:

    “Moving to a virtualized server environment is extremely compelling for corporate data centers. In a case study of British Telecom, for example, 1,356 physical servers were consolidated to 102 with a power savings of around one megawatt, a space savings of 293 racks, and a reduction in the number of ports utilized by 4,000. Put another way, moving to a virtualized server environment reduced BT’s data center footprint by over 90%. There’s big savings to be had here.”
    http://vcastocks.com/index.php/reports/network-storage-and-3par-inc-par/

    Anyway, I like the area. I’d buy 3Par, trading at coincidentally $360 mm mkt cap right now (there are 60 mm PAR shares outstanding).

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  3. [...] HP buys LeftHand Networks in a move that focuses HP on building and delivering an Infrastructure 2.0 solution.  HP is often left in the dust on the buzz behind Amazon and VMWare but HP has a deep bench in the cloud area and enterprise to be specific.  If the LeftHand can figure out what HP’s RightHand is doing then we might see a nice winner here. [...]

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  4. [...] to the everyone involved in LeftHand Networks – it was announced today that HP is buying them for $360 Million in cash.  LeftHand was born and raised in Boulder and is a large company (and acquisition) for [...]

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  5. [...] deal is similar to a $1.4 billion dollar one Dell made last year to buy EqualLogic, GigaOM points out. That purchase was the biggest cash purchase of a private tech company. This one is significantly [...]

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  6. [...] And they’re willing to pay extra for them. That focus on storage is one of the reasons that HP said on Wednesday that it had agreed to spend $360 million to buy LeftHand Networks, whose software can be used to create virtualized storage clouds on an Ethernet [...]

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  7. [...] HP Buys LeftHand Networks to Boost Storage Chops [...]

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