On Wednesday, Hewlett-Packard Co. announced an ultimate accord to purchase a leading provider of networking, switching, routing and security solutions; 3Com, at a price of $2.7 billion.

This combination will transform the networking industry and underscore HP’s next-generation data center strategy built on the convergence of servers, storage, networking, management facilities and services. The resulting business outcome will help customers simplify the network, deploy a unique and innovative edge-to-core network fabric for the enterprise and improve IT service delivery capabilities, all delivered with best-in-class price-performance.

Eyeing on the computer networking a market dominated by Cisco, the 3Com acquisition represents HP’s strategy to build on best-in-class price-performance networking facilities. Consequently, expand into more profitable areas than PCs.

HP, which is cutting 24,600 jobs as part of the EDS acquisition, didn't address whether there would be layoffs at 3Com, which has 5,800 employees worldwide.

Given most of 3Com's $1.3 billion in annual revenue comes from China; the acquisition of 3Com will dramatically expand HP’s offerings and considerably reinforce the company’s position in China – one of the world’s fastest-growing markets.

"It makes a lot of sense. Hewlett-Packard has been making great inroads into the networking market. By buying 3Com they get more market share and a product line that's pretty well thought of. They also get access to a lot of cheap labor in China. And they're not paying a big price for it," said Fred Hickey, editor of the High-Tech strategist newsletter.

As indicated by the deal, the 3Com stockholders will receive $7.90 for each share, a 39 percent premium to 3Com's closing stock price. Thus, the transaction is expected to close in the first half of calendar 2010.

HP foresees that the contract will turn supportive for the enhanced fiscal 2010 income.