Dell Sees "Little Limitation" In M&A Strategy

Dell, the world’s No 3 PC seller, is looking for acquisitions to bolster its consumer, small and medium business that accounts for almost half of the company’s total sales, a company executive told Reuters. “You will see acquisitions from us,” Steve Felice, President of Dell’s newly created consumer, small and medium business unit said in a phone interview on Tuesday. “They’ll be pointed towards the strategy that we have as a company and one of those key strategies is increasing the solutions so that we can be the best-value solution provider to customers,” he said, adding that the company was looking at key areas such as systems management and security.

“Because of the great cash performance of the company, we ended the last quarter with approximately $11 billion in cash. So… we really have little limitation in what we can do and so it’s just going to come down to the return that we can get and how that meets our profile for delivering good returns to our shareholders,” Felice said.

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Dell last year bought technology services provider Perot Systems for $3.9 billion, its largest ever acquisition, to expand its technology services business and compete with Hewlett-Packard and IBM. The company, which generates more than half of its revenue from personal computers, has been moving to diversify into higher margin businesses such as technology services at a time when its margins are hurt by sales of lower-priced PCs.

Dell – which also competes with Lenovo and Acer – last month said it is focused on improving profitability in its consumer business, a segment that has hurt the company’s overall gross margin performance. It has consolidated the consumer unit with its small and medium-sized business segment and Felice said the new unit accounts for about $24 billion to $25 billion of Dell’s 2009 sales, or roughly 45-47 percent, and employs about 22,000 people or about a quarter of the company’s total workforce. (Reuters)