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?