Dell Cloud Widens with Wyse

Dell Inc. (DELL - Analyst Report) is set to acquire cloud-vendor Wyse Technology. The tech big-wig mentioned that it signed a definitive agreement yesterday but did not provide any detail regarding the purchase consideration.

The acquisition reflects the third consecutive deal this year and also furthers Dell’s objective of moving to the higher-margin segments, such as software, storage and services. The acquisition is expected to be wrapped up by July following the approval of customary conditions.

California-based Wyse Technology is a provider of thin client (usually a device or a program that allows a number of users to perform computational functions based on a single server) hardware and software, desktop virtualization software and cloud software for all computing devices. For better service, Wyse partnered with tech giants such as Cisco Systems Inc. (CSCO - Analyst Report), Citrix Inc. (CTXS - Analyst Report), IBM Corp. (IBM - Analyst Report), Microsoft Corp. (MSFT - Analyst Report) and VMware Inc. (VMW - Snapshot Report).

Wyse Technology will not only enrich Dell’s desktop virtualization capabilities, but also expand its enterprise solutions portfolio, as a whole. This way, Dell is becoming a one-stop shop for various cloud solutions, be it hardware or software.

Dell acquired SonicWall in March and AppAssure in February, to boost its enterprise solutions portfolio. California-based SonicWall is a key player in the advanced network security and data protection market. SonicWall’s assets are expected to help Dell deliver extensive security product suites for the SMB (small and medium business) sector.

On the other hand, AppAssure’s offerings will complement Dell’s cloud storage offerings. Virginia-based AppAssure is in the business of developing backup and recovery software for all storage infrastructures (virtual, physical and cloud).

We are unclear about the extent to which the Wyse acquisition will be financially accretive to Dell. But we believe that the continuous enhancement of the enterprise solutions portfolio would generate higher revenue, going forward. We also think that the positive impact of all the acquisitions may not be evident for some time, as the new units would take time to gel with the existing capabilities.

We understand that soft demand in the Consumer segment, a high debt level and stiff competition from technology majors will remain concerns, but we feel that Dell will successfully capitalize on increasing IT expenditures and show top-line improvement.

Currently, Dell has a short-term Buy recommendation, as indicated by the Zacks #2 Rank.