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Dell to buy Perot Systems for $3.9 billion
Update 9:40 a.m. PDT: Added details of the movement of shares for Dell and for Perot Systems.
Dell announced Monday that it will buy IT services provider Perot Systems for $3.9 billion.
The two companies expect to provide a broad range of IT services and packages, expanding the global reach of Perot Systems and selling Dell computer systems to additional Perot customers. The move could be a shot in the arm for Dell, giving it a way to diversify beyond its bread-and-butter business of selling hardware.
"This significantly expands Dell's enterprise-solutions capabilities and makes Perot Systems' strengths available to even more customers around the world," said Dell CEO Michael Dell. "There will be efficiencies from combining the companies, but the acquisition makes such great sense because of the obvious ways our businesses complement each other."
Perot Systems, founded by one-time presidential candidate Ross Perot, provides IT services and business solutions to customers in health care, government, manufacturing, banking, and insurance. The company has built a large customer base in North America, Europe, the Middle East and Africa, and Asia.
"Today's announcement is the next step in formalizing a relationship that has flourished for some time," said Perot Chairman Ross Perot Jr. "When my father founded Perot Systems he envisioned a global information-technology leader. The new, larger Dell builds on that promise and its own successes by taking Perot Systems' expertise to more customers than ever."
Under the agreement, PC and server maker Dell will acquire all outstanding common stock of Perot Systems for $30 a share in cash, a 65 percent premium over Friday's closing price. Subject to the usual government approvals, the deal is expected to close in Dell's November-January fiscal quarter.
In Monday morning trading, Perot Systems' shares were up by essentially that same margin, to $29.60. Dell's shares were down about 4 percent to $15.92.
Once the deal is completed, Perot Systems will become Dell's services unit, headed by Peter Altabef, current Perot Systems CEO. Ross Perot Jr. is expected to be considered for a slot on Dell's board of directors.
Dell and Perot Systems have worked together in the past. In April, for instance, they teamed up to get in on the ground floor of electronic health records, a field that is expected to grow substantially in coming years as hospitals and physicians increasingly digitize patients' medical records. The companies also talked about the ability to run some medical applications in a hosted, "private cloud" offering to help make costs more manageable.
One of the largest computer makers in the world, Dell has been hit hard by the global recession as its business customers hold off on upgrading their banks of servers and arrays of desktop and laptop PCs. In its most recent quarter, Dell's earnings were down 23 percent year over year to $472 million, on revenue of $12.76 billion, also down just over 20 percent.
Dell and Perot Systems say that over the past four quarters they have taken in a combined $16 billion in enterprise hardware and IT services revenue, with about $8 billion from enhanced services and support.
Lance Whitney wears a few different technology hats--journalist, Web developer, and software trainer. He's a contributing editor for Microsoft TechNet Magazine and writes for other computer publications and Web sites. You can follow Lance on Twitter at @lancewhit. Lance is a member of the CNET Blog Network, and he is not an employee of CNET. 
Dell should pull it's head out and get it's own ducks in a row rather than try to buy prosperity.
So now they're buying EDS Jr.
Makes Ross Perot look like a genius, twice.
Not so much the housing problem, a similarly related issue (greed) but the lack of employment for highly skilled workers in the USA has caused this economy to collapse and it will never recover unless we get people working and working at the pay they should be earning for their experience. And maybe just as bad, the UNDER employed growing at an alarming rate. And the buffoon politicians are wonder where all of the tax revenue has gone? Its gone with the jobs and the manufactured products...... that giant sucking sound is where it went. Idiots - all of them.
I completely agree. The job losses from outsourcing are the source of the problem. I believe companies should be taxed for every outsourced position. They want americans to spend on their products and they ship the jobs overseas. Money that goes overseas circulates in their economies and most likely will not ever return. Of course companies may pay more for labor here but the money circulates here and creates more opportunities for them to sale their products here as well.
Jobs that stay here produce demand for housing, cars, food, fuel, computers and everything else sold in this country. Stop the offshoring of jobs and I'll buy stock in U.S. companies again. Of course, we don't want to offend any so called allies by putting policies in place that would stop free trade. We're afraid that they might not buy from us. Personally, let them keep their manufactured goods along with the 'Services' they offer. Let them create a demand in their own country for those items.
Of course, soon enough, there will be demand for all of it because they'll have all of the money.
http://brainstormtech.blogs.fortune.cnn.com/2009/09/21/brand-values-apple-12-dell-12-microsoft-4/?source=yahoo_quote
http://www.electronista.com/articles/09/09/17/iphone.ipod.macs.top/
Now who is the WinTard?
When you see Dell with a 95% market share I suppose.
+1
It's obvious from comments above, and elsewhere on the 'net, that the home user support quality level has taken quite a beating. Dell, like many others, has had to cope with mega-growth, globalization of manufacturing and service outsourcing... sometimes those efforts come with severe growing pains.
While I think it's a bold move for them to expand their business into one where they seem to be transforming into a service company (rather than simply a JIT built-to-order direct equipment maker) I hope that they don't lose sight of what makes (made?) them a most-admired company in the first place.
Time will tell, I suppose.
Apparently they still havent got their act together. No wonder HP and now even Acer are crushing them from all directions. I think the statement to be said here is that "lipstick" statement - which is over used and I wont retype it... But you all know what I am talking about. Dell will still be Dell - crap.
+1
Applications expertise adds to the Dell portfolio, particularly if he can seize the leadership position in Cloud Health (this includes home-based wellness management), Cloud Education (This includes home-based and Charter School applications), and ...wait for it...here it comes...Cloud Commuting, one of the biggest business productivity and potential employee satisfaction boosters of all, to say nothing of pollution and energy savings, real estate savings, why the mind boggles!
The Internet's semi -final iteration will need much more bandwidth capability in application segments, maybe even software-driven delivery selection for differentiating between "best choice" on-the-fly management of Wireless, Cable,and Telco Content delivery choices.
Separation of Content and Infrastructure MUST be one of the top priorities of the FCC's current efforts, and it will be helped by the FTC's push to consider the long-standing monopoly advantages enjoyed by legislated lack of competition. particularly as regards the Broadband Stimulus Applications now being reviewed.
This must be changed to offer reasonable Infrastructure access to Content at reasonable cost.
So Del and EDS here's hoping you can combine two great companies into something that benefits society and consumers long-term, and enjoy making good profits.
You will earn them.
And, whats worse? Its NOT very secure. I would NEVER recommend to anyone that they back up their computer to some "cloud" backup service. And thats just the start.
Wake up people. Use your brains, stop being sheep.
For Dell, it would be good, but if you were a customer, be prepared to have your money sucked out by the Perot System.
All this means is that these practices will now be apart of Perot Systems.
Enter Paulson and gang and this "sky is falling" ******** that they successfully smeared across our faces and one year later MOST of my credit cards are in the mid to high 20% range. These are cards from banks that took MY FUTURE MONEY in so-called "tarp" funding or the "stimulus" garbage we all got taken with. Bank of America = 28.99% Citicorp = 19.99% and 25.99% and I could list more. Thats bull crap and the people are fed up with this.
Then we get this buffoon Obama and he's no better, passing his own "stimulus" bill that did NOTHING but make those bankers and other large companies and unions more wealthy. And, if he has his way, he'll suck more out of this nation and its citizens with GovCo Health Control and global warming taxes. Talk about massive hoaxes perpetrated on the people of this nation:
1) WMDs
2) "The sky is falling we are days away from a depression ******** Act of 2008"
3) "The sky is falling we are days away from a catastrophe of massive proportions ******** Act of 2009"
4) * "The GovCo's nationalized health control system, by Doctor Pelosi and the attending physicians of our do-nothing Congress" bullcrap act of 2009
5) * "The cap and trade because we are 100% positive that our cars have screwed up the planet but cant predict tomorrow's weather with any level of accuracy" bullcrap hoax conceived by non other than the inventor of the intertubes: Al Gore.
* - we have time to stop this bull from happening and not be the sheep that we have been, led to the slaughter house one after the other after the other.
So dont worry about "Delrot Systems" getting 'too large to fail' because there may not be anything left of this nation once #4 and #5 are 'accomplished'
And, to think of all this and we dont even know for sure if our president has a birth certificate.
This makes perfect sense. As for Perot. Hmmm From an IT perspective they are NOT the top of the pile. Dell should have looked into getting their hands on CSC instead. Perot isn't top shelf IT, but they aren't bargin barrel either. Its a solid company.
- by October 15, 2009 12:15 PM PDT
- can't see much success to DELL
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(37 Comments)check out the case study (inside) of perotsystems working...
http://blog.rajesh.co.in/2009/04/organisational-culture-case-study-perot.html