DELL on Acquisition Spree

Dell Inc. (DELL - Analyst Report) continues to expand its enterprise technology portfolio with the intention of taking over another information-security services firm, SecureWorks Inc. The back-to-back acquisitions are expected to beef up Dell’s products and services targeted at the corporate world. However, Dell has also mentioned its intention of not acquiring any more security firms.

Financial terms of the deal were not disclosed. It is expected to be wrapped by early 2011.

Atlanta-based, privately held SecureWorks Inc. provides information-technology services to companies across different industries. The company specializes in managed security services, security and risk consulting, and threat intelligence.

The recent consolidation in the security space is perking up. We have seen a couple of acquisitions in the past few days. Of them, Intel Corp.’s (INTC - Analyst Report) acquisition of McAfee Inc. (MFE) and Hewlett-Packard Co.’s (HPQ - Analyst Report) acquisition of ArcSight Inc. are worth mentioning. The need for the highly scalable and flexible network and information technology security across different industrial sectors has actually prompted consolidation in this area.

With SecurityWorks’ input, Dell will be able to expand its Security-as-a-Service offerings and facilitate customers to easily access reliable, capable and innovative information security to fight frequent and severe cyber attacks.

Dell’s firm footing in the storage space is encouraging. Recently, the PC maker acquired enterprise data storage solutions provider Compellent Technologies Inc. (CML) to strengthen the existing level of its storage offerings. We believe that the enhanced storage platform will attract new users from different industry sectors.

But soft demand in the Consumer segment, a high debt level and stiff competition in computing and emerging cloud-computing spaces are concerns.

Currently, Dell has a short-term Hold recommendation, as indicated by the Zacks #3 Rank.

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