Friday, October 1, 2010

Dell Gets Into `Rhythm' on Acquisitions, Altabef Says


Dell Inc., the world’s third- biggest maker of personal computers, will make acquisitions to complement internal growth that’s set to exceed the market, said Peter Altabef, president of the company’s services division.

Following the acquisition of Perot Systems Corp. last year, its biggest-ever purchase, Dell has bought four companies and plans to seek more. This month, it was beaten by Hewlett-Packard Co. in an 18-day bidding war for data storage provider 3Par Inc.

“We are getting in a mode now where we really do have a rhythm of how to acquire and integrate companies,” Altabef said in an interview in Berlin yesterday.

Dell has about $15 billion in cash that it could spend on acquisitions, Chief Executive Officer Michael Dell told French newspaper Le Figaro in an interview published yesterday. He may seek new targets that have technology similar to 3Par’s. Such companies include Pillar Data Systems Ltd., Xiotech Corp. and Compellent Technologies Inc., according to Roger Cox, an analyst at Gartner Inc.

Altabef declined to comment on whether one of those companies might be next on Dell’s list, while saying that the company wants to continue to make acquisitions and invest internally in storage capabilities. He said it was Dell’s “choice” to quit bidding for 3Par.

Dell, based in Round Rock, Texas, climbed 15 cents to $12.86 at 12:28 p.m. New York time in Nasdaq Stock Market trading. The shares had declined 11 percent this year before today.

Cloud Technology

Dell bought Perot Systems for about $3.9 billion last year to reduce its reliance on PC sales. Altabef was the CEO of Perot Systems, which provides computer services. Since then, Dell has bought systems-management-appliance company Kace, software maker Scalent, and data storage companies Exanet and Ocarina Networks.

“We’ve shown discipline in our approach to acquisitions, and we’ve shown that we’re successfully marching on a path to bring in companies with particular needs,” he said.

Altabef said technologies such as cloud computing are “fostering consolidation.”

Cloud technology -- which lets users log onto exactly the same virtual desktop wherever they are in the world from a mobile phone, a tablet, a laptop or a desktop -- is one of those technologies, he said.

With virtual desktop services, data typically resides on a remote server, so having data storage centers is becoming more important.

“There is a certain amount of scale associated with these trends and there is a certain amount of convergence of hardware, software and services,” Altabef said.

High Prices

To do a virtualized desktop correctly, companies need the hardware, the software and the service ability to make sure that it integrates and works, he said.

“So there are some trends that would point to this kind of consolidation,” he said.

He said that while some price tags for companies may appear high, “the market tends to react by companies developing more capabilities” in the areas that are particularly in demand.

“I would expect that we’ll see a bevy of companies working very hard in such areas as storage, which are clearly things that are becoming more and more important,” Altabef said. “It’s clearly an area that will grow in the future.”