Cantor Morning News | Event Driven

· “PAR didn’t seem like the best fit for DELL, but we do know that DELL wants to get into that upper tier. EMC wouldn’t be a great fit with PAR and IBM wouldn’t be a great one either because they already have XIV. The reason DELL doesn’t seem like a great fit is because people aren’t looking for DELL to fill a hole, it is DELL that is looking grow on their own. Customers haven’t come to DELL wanting them to grow into the upper tier; this is DELL’s desire to get into that area, and their need to grow.”

· “The PAR is a rounding error financially for both DELL and HPQ, but it is probably a better fit for HPQ, and certainly HPQ can out gun DELL easily.”

· “There is some overlap between DELL’s EqualLogic and us (CML).

· “It is safe to say that if we got an unsolicited bid, we would go through a process. And surely with any sort of unsolicited bid for PAR there would have been a process as well (he had not listened to the HPQ conf call at the time of our conversation.)

· HPQ and PAR have always had a good relationship, largely because of David Scott (CEO of PAR), but also others. HPQ would have known what is going on with PAR (again, he had not listened to the HPQ’s conf call at the time of our conversation.)

Part II

· “This is petty cash to HPQ; they can throw around $100mm so easily it’s scary. I do happen to think they (HPQ) want PAR, but is it conceivable they are just trying to prevent DELL from getting them and growing or even that HPQ is just trying to get DELL to pay more, yes it is conceivable.”

· “DELL is in real trouble here. They need to grow or they run the risk of not being one of the 4 or 5 players who survives in several years. Right now no one is sure what the future of DELL is. They need to do something. Clearly HPQ will be one of those 4 or 5, but DELL who knows, they are in a tough spot. DELL will seem mighty small in tech if they don’t win this or grow elsewhere and soon.”

· “This seems to be much like the DDUP acquisition, right now both companies can afford it, but at some point DELL just isn’t big enough. HPQ can easily blow them away if they want to, and maybe they very well do.”

· “DELL can’t do anything on their own; they need to buy and partner. HPQ can always build on their own in any area if they wanted to; this is not the case with DELL. Who knows, maybe CSCO will buy DELL one day.”

· “It doesn’t matter to us who wins PAR.”

· “If we were to be approached we would naturally hire bankers. The only way to maximize value is to hire bankers and run a process. We have not hired bankers.”

· Could we be a plan B for DELL? Sure. Executives often don’t go after PLAN B before exhausting Plan A for a number of reasons, and often they want to let the dust settle a little, but yes we could be a Plan B for DELL. We would definitely help get them to where they seem to want to go. PAR came to the market a little ahead of us and used a direct sales force and now their customers are large and their relationships are strong and mature. They reside mostly at the top of the triangle (top tier). We came to the market after PAR and partnered with many people and reside more mid-tier. We can play in that upper tier now if we wanted to, but really in 12-18 months we will be able to compete with anyone in storage including the upper tier. We are about 12-18 months away from being where we want to be as a company. PAR is playing where they always wanted to play and they have done a very good job. We will never stop having a focus on mid-tier, however. But as an example of the difference between us and PAR: A $1mm sale is quite unusual for us, but 75% of PARs sales are for greater than $1mm. But PAR has 400-500 customers and we have roughly 2200.”

· “We do have some overlap with DELL, but we could be a good acquisition for them.”

· Dell wouldn’t want ISIL – ISIL is in storage, but they are more of vertical play. Their systems get sold to those who do video and pictures and so they are a niche play…a very good niche player, but still a niche player.”

· “DELL might very well want CVLT. They sell a lot of CVLT now for CVLT and it doesn’t obsolete any of DELL’s products. CVLT is a software company, not a disk company like us, but DELL might find them attractive as an acquisition target.”

· “There will certainly be a lot of M&A in tech in the next few years, and it will be fun to see how this all shakes out. Certainly scarcity is a good thing and will be a good thing.”

Active Names

DPTI 2 ways, ADCT buyer, HEW/AON 2 ways/options, NOVL 2 ways, Q/CTL 2 ways, SII/SLB setter, AYE/FE 2 ways, ATAC buyer

NTY buyer, LIA buyer, ACF buyer, DIVX/SNIC Setter, UNCA buyer, DYN 2 ways and buy-writes, ALY buyer

PAR 2 ways and Put Calendar buying, PTV Large buying, POT 2 ways/options, RSCR buyers, XJT 2 ways, FBRWY 2 ways, DISCK/A unwinder

MEND 2 ways, CPII/CMTL setter, ID buyer, MFE large buying

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