Hewlett-Packard (HPQ) CEO Mark Hurd has won Wall Street accolades for turning around the once-moribund company in just a few short years. Hurd expertly cut back in slow-growing units while priming faster-growing businesses for higher performance. He pulled off a string of acquisitions aimed at broadening HP's ability to deliver consulting services, and he plugged holes in its product lineup.

Hurd also took HP's sprawling bureaucracy and turned it into a transparent cash machine with a cutting-edge infrastructure that let him see day-to-day sales trends for every unit. In other words, Hurd made HP function a lot more like Cisco Systems (CSCO), the giant network equipment maker that has been a crucial HP partner for over a decade.

Computer giant Hewlett-Packard (HPQ) announced a $2.7 billion deal to buy 3Com (COMS), the huge networking company, late Wednesday. It's HP's fourth-largest acquisition ever and instantly makes the Silicon Valley pioneer the second-largest networking company in the world after Cisco Systems (CSCO). The deal, which represents a 44% premium on 3Com stock, sent 3Com shares soaring some 35% to $7.65, 25 cents short of HP's offer, in after-hours trading.

HP's move is a bold attack on Cisco, the networking Goliath. "Companies are looking for ways to break free from the business limitations imposed by a networking paradigm that has been dominated by a single vendor," Dave Donatelli, HP's executive vice president and general manager for enterprise servers and networking, said in a statement.

Cisco's (CSCO) figures were good, but almost incidental to its bright prospects. The company has become, through both organic growth and M&A, the business world's great proxy for the rise of online video. Its routers deliver massive packets of data across the web. Its videoconference business is used for enterprise communications all over the world. Its set-top boxes power cable and telecom video delivery into the living room.

Cisco reported first-quarter net sales of $9 billion, a 13 percent drop. Earnings per share were down 19 percent to 30 cents. The company also announced a share buyback, a strange move for such a great M&A machine. It said that on Nov. 4, its board of directors authorized up to $10 billion in additional common share repurchases. Cisco's board had previously authorized up to $62 billion in buyback's. Usually that arsenal would be used for more acquisitions, something Cisco seems to do every month.