Perot Systems May Be What Dell's Service Business Needs
21 Septembre 2009 - 8:50PM
Dow Jones News
Dell Inc.'s (DELL) proposed acquisition of Perot Systems Corp.
(PER) for $3.9 billion may be just what the doctor ordered for the
computer maker's fledgling services business.
Round Rock, Tex.-based Dell generates around 60% of its roughly
$61 billion in annual revenue selling computers and servers. Now,
the company is following other competitors that have expanded from
hardware into services, like International Business Machines Corp.
(IBM) and Hewlett-Packard Co. (HPQ).
Unlike those companies, however, Dell isn't trying to be all
things to all men. Rather, Dell is building on its already
prominent government and healthcare business, the very industries
Perot Systems specializes in serving. That could make Dell even
more attractive to its clients looking for both packages of
hardware and advice on how to deploy it.
Though Dell is late to the services sector, its timing might
prove opportune. Tech spending in the approximately $2.5 trillion
U.S. health-care industry is expected to grow as much as 10% this
year, according to findings from a recent survey by market tracker
IDC. That natural growth could get a boost if the Obama
administration is successful pushing through health-care reform,
which would expand coverage to millions of Americans.
Also auguring well for the acquisition: An earlier economic
stimulus proposal that has large dollops of cash directed toward
the government and healthcare sectors. IDC identified about $23
billion in spending on government and healthcare IT as part of the
stimulus package.
"We believe that (Perot Systems') strong health-care and Federal
government business create sustainable competitive revenue
opportunities for the combined companies," BMO Capital Markets
analyst Keith Bachman wrote in a note. He added that while Dell
would have an overexposure to the U.S., that could benefit the
company in the near term because the country will likely emerge
from the recession earlier than Europe.
Of course, the acquisition won't propel Dell into the top
rankings of IT services providers. Perot Systems has annual revenue
of just $2.8 billion. That's a far cry from H-P's acquisition of
EDS last year, which turned it into a services powerhouse, or IBM's
decision to start shifting its business to high-margin
services.
Now, Dell is making the same move, though in a deliberately
narrow fashion. Capitalizing on its own strengths, analysts say, is
the smart way for Dell to look for growth.
"It's a step in the right direction in addressing Dell's
services capability," said Kaufman Bros. analyst Shaw Wu.
-By Ben Charny, Dow Jones Newswires; 415-765-8230;
ben.charny@dowjones.com