HP still seen looking for deals after 3Com

By Gabriel Madway

SAN FRANCISCO (Reuters) - Hewlett-Packard Co's (HPQ.N) $3.1 billion play for 3Com Corp (COMS.O) will help the technology giant expand its product portfolio amid rapid industry consolidation -- and few think HP is done shopping.

HP's deal for 3Com should allow it to better compete with networking leader Cisco Systems Inc (CSCO.O), analysts say, as HP pushes to become a soup-to-nuts provider of technology products and services.

Wall Street largely applauded the acquisition as a low-risk move by HP to add a complementary product line, bolster its range of offerings, and get welcome exposure to the China market.

HP's deal-making is expected to continue even though the company is still digesting last-year's $13 billion acquisition of IT services company EDS.

Given Cisco's recent flurry of deals, and with rivals IBM (IBM.N) and Oracle Corp (ORCL.O) on the prowl, the competitive pressures won't wane any time soon.

"I don't think this is the end game," said Kaufman Brothers analyst Shaw Wu.

HP is the world's largest technology supplier, so analysts say it is tricky to predict which way it will go next with M&A, be it software, storage or a continued emphasis on networking.

Wu said a software acquisition likely makes the most sense for HP given that software companies have higher margins, but said there is a dearth of attractive names on the market. Because of that, he said HP could continue focus on networking.