Interview: Charles King on CA’s 3Tera Acquisition

February 24th, 2010

CA acquired 3Tera today. I caught up with Charles King, principal analyst at Pund-IT, to discuss this and the slew of other mergers and acquisitions in the tech sector. Listen in to part of my interview:

We are seeing so many acquisitions these days…

It seems to be that time of the year. As we are looking at the end of the first quarter, companies are looking back at their performance over the past quarters and making some determinations about how well they can move forward. Others that have either been doing well or have deep pockets…It’s always a good time to keep your eyes open for bargains but there certainly seems to be an awful lot of acquisitions going on right now.

I think it’s hitting the economy is hitting some companies, especially smaller companies, a bit harder than others. The small vendors and specialty vendors it seems to me that when you’ve got a smaller pool of potential clients you are standing on a narrower ledge.

There was an SGI acquisition of a small storage specialist yesterday. SGI, which used to be Rackspace, has become a specialist at finding these highly-focused tech companies that are selling at fire sale prices. They did SGI last year. This company that they picked up for $2 million yesterday had received over $125 million in venture capital funding in the last couple of years. If you are one of those VC investors you are probably feeling a little bruised this morning.

Is the 3Tera a good acquisition for CA?

Whenever you see a deal like this where a company with a fairly broad technology offerings buys a company with a great deal of highly focused expertise, it reflects an ongoing issue in IT and that is, is it cheaper to build or buy? In this case, getting a small company with great people and an existing workable solution set will allow CA to get up and running and into the market much more quickly than it probably could have if it had built its own cloud management suite and GUI.

It looks like a good fit and it certainly is well aligned with CA’s strategy of broadening its very deep and well regarded expertise and data center management out toward the cloud. so it aligns well from a tactical financial point of view and should work very well strategically for the company as well.

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