Dell's planned acquisition of Perot Systems for $3.9 billion, announced Monday, anchors the company's plan to grow by selling corporations consulting services to go along with their PC purchases.
Dell joins a trend of tech giants augmenting core product lines by supplying related professional services. Its chief rival, Hewlett-Packard hpq, embarked on this strategy last year by acquiring Electronic Data Systems for $13.9 billion.
And IBM ibm is decades into transforming itself from a big hardware supplier into a wellspring of corporate professional services. "This may be a case of better late than never," says tech industry analyst Rob Enderle of The Enderle Group. Dell would have been better-positioned, he says, had it beaten H-P to the punch and acquired the larger, more lucrative EDS.
Dell, based in Round Rock, Texas, has offered $30 per share in cash for Perot Systems, based in Plano, Texas. That's a 68% premium over Perot's closing price Friday. Dell dell shares fell 68 cents to close Monday at $16.01. Perot Systems' per shares rose $11.65 to $29.56, a 65% pop.
CEO Michael Dell exuded optimism. In a conference call, he said the Perot purchase supplies a platform for complementary acquisitions.
"This acquisition makes great sense because of the obvious ways our businesses complement each other," he said, adding that it should "enable us to grow profitably over time."
Perot Systems brings more than 1,000 customers spending $2.8 billion a year for tech consulting services, mainly health care companies and big federal agencies, including the Department of Homeland Security and Department of Defense.
Last year, Perot Systems, founded along with EDS by onetime presidential candidate H. Ross Perot, earned $117 million.
"When my father founded Perot Systems, he envisioned a global information-technology leader," said Ross Perot Jr., chairman of Perot Systems. "The new, larger Dell builds on that promise and its own successes by taking Perot Systems' expertise to more customers than ever."
Meanwhile, Dell last month reported that its fiscal second-quarter profit fell 23% from a year earlier, with sales down across all its business units. Dell has been scrambling for a couple of years to diversify beyond being the No. 2 supplier of PCs.
"The reality is they haven't done much to this point," says Gartner analyst Dane Anderson. The Perot acquisition gives Dell "a decent-sized professional services company" to blend with, "without biting off more than they can chew."
Dell should not expect to instantly be in position to beat out HP and IBM on giant contracts, Anderson says.
On the other hand, as Dell lands consulting contracts, it will get valuable information "on what corporate buyers will pay for," Enderle says.