3PAR (PAR) : Dell to acquire 3PAR

The headline says it all.

Dell Inc. said Monday it plans to purchase data-storage company 3PAR Inc. for about $1.15 billion in cash, as the personal-computer maker seeks to boost its offerings for corporate technology departments.

Dell will pay $18 a share for 3PAR, an 86.5% premium to the Fremont, Calif.-based company’s Friday closing price of $9.65.

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Firstly, congrats to 3PAR. Storage is a tough market. Hopefully, with DELL as its backing, it can go further and go up against the likes of EMC.

The storage industry has continue to consolidate including the recent Oracle acquisition of SUN.

Without strong backing, it will take  a long time for 3PAR to build up the channels and replace the incumbent.

On the trading front, it has been a miss for me. I have wanted to buy some shares of 3PAR with this market correction.

Guess, DELL knows that this is a good time to buy (seeing that 3PAR’s shares is not going to move ahead much).

I think this is a good move on DELL’s part. Hopefully, the management can work together and provide alternatives to the industry.


Oracle to buy SUN (JAVA) …and I was so wrong!

I make a wrong bet, believing that no one else will buy SUN including Oracle.

My bet was so wrong and this is despite the fact, the chart was telling me otherwise.

I break my own trading rule, and the consequences is I lose money.

The saving grace is I know it is a bet and as such, the position is a small one.

Note to self:

Always follow the trading rules. Be discipline.


How I traded the IBM-SUN M&A news

I remember it was March 18 when I saw the headline in the afternoon that rumours are going around that IBM may acquired SUN.

By then, the pre-trading price has already shot up from $4 to $7+.

I have SUN (JAVA) on my watchlist for a long time. 2 reasons for that.

1. Cash
SUN has quite a fair amount of cash sitting around. So, unlike the financial institutes, it has a little bit more strength to weather the storm (and this is back in Dec 2008).

2. Southern Asset Management
These guys announced back in Dec 2008, that they have acquired 22 percent of SUN’s common stock. A substantial amount. There must be things that they know and I don’t know.

Nonetheless, just sitting around and not buying does not help much. And I miss the rally.

However, not all is lost.

For one, I know that such M&A news is never confirmed so early. Secondly, there is always a chance that the M&A does not go through.

So, instead of chasing after the stock on its first rally, I sold an APR 9/8 Vertical Spread. And took my profit the very same day. I choose a spread because it reduces my risk. There is never a sure thing when it comes to M&A talks (and in this case ‘rumours’).

The second chance to make money off SUN comes when it announced job cuts on the last day of Q1 (31 March). The market open and it very soon fall below 7.

This time round, instead of buying option, I decide to just buy the stock. Treating it as a lottery ticket. After all, I am comfortable enough to hold SUN stocks for the long term.

At this moment, the general market is in my favour and the counter has move to about $8 before market opens.

Just keeping my eyes open for any abnormal selling price-volume action.

I’m wondering, how will others trade this counter, if you have miss the first rally?

Your thoughts are appreciated.