Tuesday, July 25, 2006

The Mercury is heating up...

...or more like gobbled up. Today, Hewlett-Packard announced that it will acquire Mercury Interactive for $52 a share, or $4.5 billion in cash. The Mountain View, California, based company builds products for managing application development...a tough market to compete in, to say the least.

HP is planning to integrate Mercury tools into it’s OpenView system and network management software for data centers. This move is intended to bring more to the developer through a single vendor than what they can get from purchasing two separate products.

"I am confident that this transaction means HP is building a software business that must be reckoned with," said Mark Hurd, HP's chief executive officer.

In my opinion, the Mercury toolset provides a good feature set, but the technology is aging and is priced at a premium to competitor offerings. Competitors like Microsoft are entering the market with a more integrated solution at a much lower price point.

Hey, HP! 4.5 billion dollars is not a good price for this company! This is not the kind of heat you need to burn up your competitors.


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