3Par (PAR) May Be a Hot Takeover Target in the Near Term - Barron's (VZ, CS, PCLN, More)

3Par (NYSE: PAR) is a small company this is making a strong case as a potential take over target in the electronic data storage industry, Barron's reports today. The company, with competitors such as EMC (NYSE: EMC), IBM (NYSE: IBM), and Hitachi (NYSE: HIT), maintains a 65% gross margin, and introduced newer technologies than it's competitors in 2009.

Those new technologies are expected to be met by competitors in 2010, as spending frees-up and back-orders are restarted again. These worries have pushed 3Par's stock down 3% over the last year, as the NASDAQ Composite rose more than 25% in the same period.

What 3Par's advantage is, is the company's data storage system utilizes a multitenant environment where data from different sources can be accesses simultaneously and efficiently. The storage is also extremely flexible, allowing for the storage space in a separate bundle to expand and contract as needed, much like shelving in a cupboard. This technology is well-suited for the new cloud computing environments being developed and implemented.

3Par is expected to have a FY09 EPS of $0.06, compared to $0.08 in FY08. Their ratio of enterprise value-to-sales is 2.3, versus the industry average of 2.5.

Some of 3Par's customers include MySpace, Verizon (NYSE: VZ), Credit Suisse (NYSE: CS), Priceline.com (NASDAQ: PCLN), U.S. Census Bureau, and the U.S. Department of Justice.

Global storage demands have climbed from 2 billion terabytes in 2006 to over 12 billion terabytes now, approximately 25% more than current available storage capacity.

Estimates have initial take-over offers between $15 - $20 per share, valuing the company at over $1 billion. Hapoalim Securities sees "that there are just not that many firms out there that the big players wish to buy."

Investors may be able to bring their portfolio above par with 3Par.

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