Commentaries

Dell shows discipline in opting for Perot

Eric Auchard

Sep 21, 2009 21:44 UTC

– Eric Auchard is a Reuters columnist. The opinions expressed are his own –
  
By Eric Auchard

LONDON, Sept 21 (Reuters) – Dell Inc has made a solid move into computer services by buying Perot Systems, even if the hefty price Dell is paying is hard to justify on Perot’s standalone prospects alone. 

And the price looks very rich indeed.  Dell is spending nearly $4 billion in cash — a premium of 68 percent to Perot stock’s recent close — to buy a slow-growing U.S. computer services firm focused on health care and government clients.
  
That’s 1.4 times Perot’s expected 2010 sales, or roughly two times more than rival Hewlett-Packard paid when it acquired EDS in a $13.2 billion deal last year.

But the Perot deal is best understood as arming Dell with a sales force to push its broad computer hardware lines and expanding software and services offerings out to healthcare and government customers. The acquisition lets Dell neatly expand into these markets without indulging in mega-dealmaking of the sort it has no history doing. And Dell will still be left with $9 billion in cash for any additional deals.