UPDATE: Dell To Buy Cloud Software Maker Wyse Technology

Dell Inc. (DELL) agreed to acquire cloud-computing software provider Wyse Technology Inc. as the computer maker continues expanding its offerings for business customers.

Financial terms weren't disclosed. Dell expects the deal to close in the second quarter and said it should add to earnings in the second half of fiscal 2013.

Wyse provides desktop virtualization technology, which improves efficiency by allowing multiple systems to operate on one computer. The San Jose, Calif., company also provides software that allows companies to securely and remotely manage their devices, as well as access their information through mobile devices.

Demand has been growing for such products, boosting Wyse's revenue by 45% in its last fiscal year, said Dave Johnson, Dell senior vice president of corporate strategy. By comparison, the industry grows by a mid-teens average, on a percentage basis, he said.

"Wyse is an independent entity that's really been gaining momentum to grow into a No. 1 market share position," Johnson said during a conference call to discuss the acquisition.

Wyse's 12-month trailing revenue totaled about $375 million, Dell said. In addition, its operating margins were in the double digits, Johnson said.

Dell shares, up 15% over the past 12 months, rose 7 cents to $16.66 in recent trading.

Faced with soft PC sales, Dell of late has been increasing its focus on high-margin business products, including storage systems, security, services and networking. Since 2009, the company has acquired about a dozen companies--from its $3.9 billion purchase of IT services company Perot Systems Corp. to much smaller companies such as SecureWorks and Boomi Inc. that sell software as a service.

The deal for Wyse helps it broaden its software offerings--a weaker area for the world's third-largest PC maker by sales behind Hewlett-Packard Co. (HPQ) and Lenovo Group Ltd. (LNVGY, 0992.HK). It recently hired private-equity executive and former CA Inc. (CA) head John Swainson to shore up its software business as its looks to focus on higher-margin operations like software and data-storage systems.

ISI Group analyst Brian Marshall noted the deal makes strategic sense for Dell "as a way to leverage is massive installed base of PCs and intersect future secular growth trends," such as desktop virtualization.

Dell has had some success moving into new markets, but some hurdles remain. Competitors such as H-P and EMC Corp. (EMC) still overshadow the company in terms of enterprise product sales. In addition, some of the new areas Dell is entering--such as cloud computing--already are competitive and bring new rivals such as Amazon.com Inc. (AMZN).

The company reported in February its fiscal fourth-quarter earnings fell 18% as a shortage of disk drives hurt its ability to sell higher-end computers, though revenue edged up 2.2%.

--By Shara Tibken, Dow Jones Newswires; 212-416-2189; shara.tibken@dowjones.com

--Melodie Warner contributed to this report.

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