from Breakingviews:

HP tries big buyback to quell investor discontent

Sometimes an ounce of prevention is worth a pound of cure. Case in point: Hewlett-Packard. Like many tech concerns, it is sitting on a large cash pile. But the company's bidding war with Dell for control of 3PAR raises fears it may squander its $15 billion hoard on overpriced baubles. Promising to repurchase $10 billion of stock soothes investors. Refraining from such battles would be more effective.

HP's investors were already shaken by the surprise booting of chief executive Mark Hurd from the company. Making three bids in one week for 3PAR made them feel queasier. The stock lost another 5 percent of its value last week, bringing its total losses since the start of the year to about 25 percent. HP may fear the strategic implications of a Dell victory, but agreeing to pay $2 billion net of cash -- or more than three times the undisturbed price -- for 3PAR appears undisciplined.
Promising investors to return some of their cash is a sensible move. It reminds them that HP has a good record in rewarding despite a steady history of acquisitions. Since the existing buyback program is running low, it was natural to replenish the fund -- especially if the company feels its stock is priced at bargain levels.

Investors should be comforted by the fact the buyback lessens the chances that cash burns a hole in HP's pocket. The authorization is about equal to a year's worth of free cash flow. Of course, a better way to lessen investors' fear of HP squandering their money would be to avoid irrational acquisitions, like the bid for 3PAR, altogether.

from Breakingviews:

HP’s deal mojo unrestrained by l’affaire Hurd

Mark Hurd, the Hewlett-Packard chief executive, turned out to be a man of hearty appetites -- including for deals. Before leaving HP earlier this month under a cloud, Hurd spearheaded an M&A tear that included the purchases of 3Com, Palm, and EDS. But any bankers worried that the tech group's appetite for deals might wane after Hurd's departure can breathe easier.

HP's unsolicited bid for 3PAR, unveiled on Monday, could even be taken as a sign the company's takeover libido has been given a boost. If that were to prove sustainably the case, though, shareholders might find it troubling.

A single $1.6 billion offer by a company with a $90 billion market value is, literally, no big deal. And HP says 3PAR's data storage technology fits perfectly into its product portfolio in the arena of cloud computing. Moreover, the tech giant can point to early successes from its 3Com purchase.