MediaFile

from Commentaries:

The guessing game ahead of Dell-Perot deal

Dell Perot puzzle pieceIn retrospect, it's easy to say we could have guessed it:

Why didn't some investors put 2+2 together and figure out that Perot Systems might be a target for Dell -- before that is, Dell announced its $3.9 billion cash deal to buy Perot.

Looking back at Perot's share performance, the stock has been building up momentum since July, despite warning of weak earnings in its August 4 quarterly report. The stock, which traded under $15 throughout the first half of the year, had built to $18 by last week. Perhaps this was early optimism about 2010 prospects. But the other explanation is some timely speculation that Perot was a logical target for fellow Texan company Dell.

Dell had made little secret of its plans to acquire computer services and software companies for months. Executives had dribbled out hints about what kind of targets it was after in the weeks and months leading up to the September 21 news.

Belatedly, it's interesting to go back and read the dialogue at the Citigroup conference presentation on September 9th between Dell computer services chief Steve Schuckenbrock and a Citi analyst. It reads like the parlor game "20 Questions." The following is an unedited transcript from ThomsonReuters SteetEvents:

Citi host: On the one hand, I've heard Dell executives say that they want to acquire a services company that's large enough that you could reverse integrate your existing services business into whatever you acquire. At the same time, I think you've said repeatedly that you don't want to acquire a body shop. You want to go to where the puck is going which is more remote resolution and services and software if you will. So how do you reconcile those two statements?

from Commentaries:

Dell shows discipline in opting for Perot

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

Eric AuchardLONDON, 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.

Who runs mergers and acquisitions at Dell?

(Update: Dell PR misspoke about Johnson’s responsibilities, and we’ve made changes below as indicated.)

Dell, which announced plans to buy Perot Systems for $3.9 billion on Monday, completed the deal without help from an executive in charge of mergers and acquisitions.

It’s a touchy subject for Dell, which earlier this year named David Johnson to its executive team, poaching him from IBM where he served as head of M&A. IBM filed a lawsuit, saying that Johnson violated a non-compete agreement by taking the job with Dell. But IBM failed to persuade a judge to bar Johnson from working at Dell while the litigation is pending.

from DealZone:

Is Dell overpaying for Perot?

With something like $10 billion in cash, Dell wouldn't seem to be stretching itself to buy Perot Systems. But the $3.9 billion it is offering represents a 67 percent premium, so Dell shareholders should probably ask themselves whether Perot's business is worth so much.

Perot is a business service company with a big component dedicated to health information. It was founded in 1988 by Ross Perot -- the same Ross Perot who ran for U.S. president as an independent in 1992 and 1996.

Dell's cash pile is burning a hole in its pocket. It has said it wants to step up acquisitions, and services businesses are a logical target area, with higher margins and steadier revenue than the business of building and selling computers that made Michael Dell (pictured in shades above) the tech mogul he is today.

from DealZone:

Truth in tender offers? An eyewitness account.

U.S. Securities regulators on Thursday sued a well-connected Kuwaiti financier, saying he reaped millions in suspicious profits after false takeover reports briefly sent shares of Harman International Industries soaring this week.

Reuters reporter Ransdell Pierson was in the office working the Sunday shift when he received a fax with the purported takeover offer.  Unable to verify the authenticity of the fax, Reuters did not publish the story.  Here is Ransdell's first person account of what happened, and a copy of the fax. Would you have questioned its veracity?

Ransdell Pierson:

I was scouring newspapers on a Sunday shift in the Reuters New York bureau and waiting for news about distressed lender CIT Group, when the phone finally rang and broke my reverie. "Newsroom," I said, and the caller replied, "Your Jeddah bureau is closed today. Can I send you a fax?" The male caller, who I imagined to be a middle-aged office aide frustrated by the thankless chore of delivering his fax, said it was a press release about a deal. Something about one company buying another for about $3 billion.
"If it's such a big transaction, shouldn't this news be coming over the PRNewswire or BusinessWire?" I asked him. He explained that it was the weekend, so faxing a press release was the best route.
I gave him a fax number and he called back, irritated the document hadn't gone through. I gave him another fax number and he soon called back again, more irritated than before. So I gave him the number of a third Reuters fax machine, but told him that it needed to include contact information for all the parties. "Otherwise, we can't authenticate it." "OK, you'll have it," he replied.

from Commentaries:

A brutal logic to Dell’s reinvention: Eric Auchard

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

By Eric Auchard

Michael Dell in New DelhiLONDON, July 22 (Reuters) - Dell Inc needs to reinvent itself to cope with falling margins for key products and a spate of mergers which are rapidly reshaping the competitive scene.

So the computer maker's moves into business services that help customers slash costs rather than add new programs look promising, given that every company under the sun is chasing this goal.

The other shift in Dell's favour is that corporate buyers look ready to start spending again on technology to generate new business, albeit at lower levels than before.

Sun Valley: Reuters returns to Idaho

Nearly every powerful media and technology executive you can think of will be camping out in the idyllic and affluent ski resort town of Sun Valley this week. They have aimed their Gulfstreams squarely at Idaho so they can show up at the 27th edition of Allen & Co’s media and technology conference, which investment banker Herb Allen holds every summer here.

That means nearly every media reporter you can think of will be hovering among the hedgerows and parking lots (and in the bar, naturally), waiting to get a few precious seconds with super-wattage movie executives from DreamWorks’s Jeffrey Katzenberg to Paramount’s Brad Grey, technology heavyweights such as Michael Dell and Bill Gates, media kingpins Philippe Dauman and Rupert Murdoch and fresh-faced startup darlings like Facebook’s Mark Zuckerberg, Twitter’s Evan Williams and Ning’s Gina Bianchini.

Reuters, of course, will be among the press crew at the scene. Reporters Yinka Adegoke and Alexei Oreskovic will show up, as will I, and photographer Rick Wilking will be shooting the pictures that at Sun Valley often tell a more eloquent story than any text dispatch can.

Dell and Palm – Who needs whom?

When Dell hired Motorola’s cell phone president Ron Garriques in 2007, the talk was that the PC giant was preparing to enter the smartphone market.

More than two years later, Dell is still without a handheld gadget.

Instead of trying to build its own smartphone, Dell should simply acquire Palm, said Collins Stewart analyst Ashok Kumar in a note to investors on Friday.

Kumar posits that a Dell acquisition of Palm would help both companies, giving Dell a hot new product in Palm’s recently-released Pre, while giving Palm the deep pockets necessary to hang with the big guys.

So long analog TV; it was great knowing you

Isn’t today the big big day for the transition to digital television? You can be forgiven for forgetting — in fact that’s just how the Obama administration wants it.

Ill-prepared back in February, when the U.S. was supposed to go all-digital all the time, the government decided to push back the switchover date by four months. Experts tell the Los Angeles Times that the delay should help avoid major problems, although about 2.8 million people could be left out in the cold when they try to turn on the tube.

The smart folks over at RPA, the advertising agency based in Los Angeles, put together of list of the markets that are best prepared — and those that aren’t. It cited data from The Nielsen Co, which has been studying preparations for the transition.

from Summit Notebook:

Dell’s enterprise chief pooh-poohs netbooks

Netbooks: flavor of the month? Not according to Dell's Steven Schuckenbrock.

The PC giant's head of enterprise sales was quick to point out flaws in the stripped-down, no-frills mini-computers that have garnered rave reiews for their ultra-portability and anywhere-connectivity.

"Netbooks are a secondary device. The user experience of a netbook is just not as good. It's slower than a conventional notebook computer," Schuckenbrock said at the Reuters Global Technology Summit in New York.

Perhaps that's why Dell was slow to get into a space dominated early on by aggressive Taiwanese upstarts like Asustek. Dell, the once-preminent U.S. personal computer manufacturer, which has steadily given away market share to rivals from Hewlett Packard to Lenovo, unveiled its first netbook only in September.