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For Immediate Release
Chicago, IL – March 15, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Dell Inc. , Cisco Systems Inc. (CSCO - Analyst Report), Juniper Networks Inc. (JNPR - Analyst Report), Intel Corp. (INTC - Analyst Report) and Hewlett-Packard Co. (HPQ - Analyst Report).
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Here are highlights from Wednesday’s Analyst Blog:
Dell Captures SonicWall
Dell Inc. has moved a step forward to boost its enterprise technology portfolio, with the takeover of network security and data protection software vendor SonicWall, for an undisclosed sum. The acquisition reflects the world’s third largest PC maker’s increasing focus on the higher-margin segments, such as software, storage and services.
San Jose, California-based SonicWall is a key player in the advanced network security and data protection market. The company provides next-generation firewall technology and unified threat management (UTM) software. SonicWall has a diverse product line that largely targets small and medium businesses (SMBs).
However, the company is now turning its attention to large enterprises with a new firewall offering. SonicWall competes primarily with networking giants Cisco Systems Inc. (CSCO - Analyst Report), Juniper Networks Inc. (JNPR - Analyst Report) and others.
SonicWall’s assets will help Dell to deliver extensive security product suites. Dell’s exposure to the SMB sector will be much stronger. Last quarter, Dell’s SMB segment reported 6.0% year-over-year growth, which was much better than the performances by other segments. We believe that with SonicWall, Dell’s SMB revenue could witness a boost going forward.
Post completion (some time in the second half of 2012), the acquisition is expected to be accretive to earnings. Moreover, Dell would be able to compete in the UTM market, which, according to the tech research firm IDC, could grow at a CAGR of 13.0% through 2015.
Dell has been eyeing the security space for long. The company acquired KACE in February 2010. KACE was a provider of systems management appliances and supported Dell in delivering end-point security. Information-security services firm SecureWorks Inc. was acquired in August 2011 for its excellence in managed security services, security and risk consulting, and threat intelligence.
The need for highly scalable and flexible network and information technology security across different industrial sectors has actually prompted consolidation in this area. We have seen a couple of acquisitions in 2011. Of these, Intel Corp.’s (INTC - Analyst Report) acquisition of McAfee Inc. and Hewlett-Packard Co.’s (HPQ - Analyst Report) acquisition of ArcSight Inc. are worth mentioning.
With inputs from SonicWall, SecurityWorks and KACE, Dell will be able to expand its Security-as-a-Service offering and enable customers to easily access reliable, capable and innovative information security to fight frequent and severe cyber attacks.
We see that Dell has also been very active in expanding its storage and networking business through successive acquisitions. However, we are concerned about soft demand in the Consumer segment, a high debt level and stiff competition from technology majors. But we believe that increased IT spending could help fundamentals.
Currently, Dell has a short-term Buy recommendation, as indicated by the Zacks #2 Rank.
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