Dell on a Shopping Spree - Analyst Blog


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Dell Inc. ( DELL ) is on an acquisitions spree. After acquiring Clerity Solution -- a provider of application modernization services -- in April 2012, the company has recently acquired software company Make Technologies Inc. Financial details were not disclosed.

Make Technologies provides software and services that modernize traditional applications used by cloud-based systems. The cloud-based products from the company have the capacity to cut cost, reduce risk and re-engineer applications.

This looks like an ideal combination, as it is likely to result in single vendor solutions for any modernization activity. It should therefore open up growth opportunities for Dell's core application modernization software and services.

Acquisitions have helped drive significant growth at Dell. Earlier in February, the company agreed to buy Virginia-based backup and replication software maker, AppAssure Software and followed this up with the acquisition of California-based SonicWall in March.

Last year, the company completed the acquisition of storage solution provider Compellent Technologies Inc. This acquisition has enhanced its portfolio in the automated data transfer and management, tiering and thin provisioning segments.

Although Clerity is a very good takeover by Dell, we are unclear about the extent to which the acquisition will be financially accretive. But we believe that the continued enhancement of the enterprise solutions portfolio would generate higher revenue, going forward. We also think that the positive impact of all the acquisitions may not be evident for some time, as the new units would take time to gel with the existing capabilities.

We understand that soft demand in the Consumer segment, a high debt level and stiff competition from technology majors will remain concerns, but we feel that Dell will successfully capitalize on increasing IT expenditures and show top-line improvement.

Currently, Dell has a short term Zacks #3 Rank.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: DELL

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