HP buying back $10B worth of shares

PALO ALTO, Calif. — Hewlett-Packard Co. said today its board has authorized the repurchase of $10 billion in shares.

The announcement comes as the personal computer maker is involved in a bidding contest with rival Dell Inc. for the data storage company 3Par Inc.

Shares of HP, which is based in Palo Alto, Calif., rose $1.28, or 3.4 percent, to $39.28 in early trading.

HP said it plans to use the share buyback authorization to manage share dilution from employee stock plans and to buy back shares opportunistically.

Hewlett-Packard had $4.9 billion left under its current $8 billion repurchase plan at the end of July.

On Friday, HP raised its offer for 3Par to $30 a share, or $1.88 billion, and 3Par later threw its support for that offer. Dell is considering raising its offer of $27 a share.

Dell, based in Round Rock, Texas, has the right to match any higher bid and have its offer take precedence within three business days starting today, Dell spokesman David Frink said on Saturday.

The acquisition of the Fremont, Calif., company would help both HP and Dell beef up their “cloud computing” businesses, delivering software, data storage and other services to customers over the Internet. 3Par has technology that doles out storage space on the fly and that would help keep data storage costs down.

They are looking for ways to replace profits lost in the PC business, which is shrinking due to lower prices and higher parts costs.

At the end of last quarter, HP had $14.7 billion in cash and short-term investments. It has 2.3 billion in outstanding shares.