) has agreed to buy data protection solutions provider Credant
Technologies. The financial details of the deal were not
disclosed. Credant is a supplier of data protection solutions and
helps to control, manage and secure data sent from client devices
This takeover is expected to help Dell's computing solutions
business by enhancing the reliability, manageability
and security of its enterprise computing portfolio. The
acquisition is expected to close during the fourth quarter of
this fiscal year. This marks the company's eighth acquisition in
a row. The company is making strategic moves to evolve as a
full-service technology service provider.
We believe that this acquisition will positively impact Dell.
For the past few quarters, Dell's financial results have failed
to impress investors and we believe that the main reason for the
disappointment is the delay in the IT renewal process. However,
this acquisition would be beneficial for the company, as the
company is trying to increase its presence in the data protection
Acquisitions have been a major growth driver for Dell.In order
to diversify from the fast-changing and sluggish computing
market, Dell has taken strategic decisions to expand its storage
and software business.
Thus, Dell's acquisitions in the past few years were focused
on strengthening its position in this area. In July 2012, Dell
completed the $2.4 billion purchase of Quest Software. The
acquisition forms the backbone of Dell's software business and
helps it better penetrate into the higher-margin enterprise
segment. The addition of Quest to the company's portfolio has
enabled Dell to deliver better solutions encompassing server,
storage, networking and end-user computing solutions and
The company is eyeing more such acquisitions as it looks to
bolster its portfolio and increase focus on corporate clients.
Through such acquisitions, Dell has always made an effort to
improve its technological base.
Dell is making considerable effort to recover its past glory.
The company reported decent third quarter results with earnings
per share in line with the Zacks Consensus Estimate, but revenue
and operating income disappointing.
Although the company is exploring new sources of revenue
through acquisitions, it expects a further decline in PC
shipments. Moreover, competition faced by the company in the SMB
and server segments from players like
Cisco Systems Inc.
) is also a concern.
We therefore have a Zacks #3 Rank on Dell shares, implying a
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