Gale Technologies Acquired by Dell - Analyst Blog
20 11월 2012 - 2:15AM
Zacks
After its third quarter results and fourth quarter outlook drove
its stock toward a three-year low, Dell Inc.
(DELL) announced its sixth acquisition of the year. The acquisition
of privately-held Gale Technologies, unlike the preceding ones,
reflects the company’s effort to shift its focus from a PC-centric
business to a more enterprise-centric service business. Financial
terms of this small but important deal have not been divulged.
Santa-Clara-based Gale Technologies develops infrastructure
automation software that helps customers streamline the deployment,
use and provisioning of cloud-based infrastructure. Management of
hybrid cloud computing environments gets easier with much lower
supervision and operating costs. Its blue-chip customers include
Alcatel-Lucent (ALU), Ericsson
(ERIC) and Verizon Inc. (VZ).
The assets of Gale Technologies would form a division named
Enterprise Systems & Solutions. With the new division, the tech
giant is expected to focus more on the development of management
solutions for converged infrastructure, which will facilitate the
process of data center automation. Dell plans to retain Gale's
intellectual properties and to invest in sales/engineering to
reduce integration time.
Despite reporting a dismal third quarter, Dell’s server and
networking revenue gained momentum with an 11.0% year-over-year
increase. In this context, it is necessary to mention that another
tech giant IBM Corp. (IBM) registered a
year-over-year decline in server revenue. This indicates a solid
growth trajectory for Dell and we believe that Gale will provide
adequate support with its technological know-how and rich
client-base to achieve higher revenue growth.
We understand that the shift to the higher-margin enterprise
business is critical to Dell’s survival and success. For the past
few quarters, Dell’s financial results have failed to impress
investors and we believe that the main reason for the
disappointment is the delay in the process. But keeping in mind the
increasing demand for cloud solutions and Dell’s performance in its
Enterprise business, we believe that the company has the potential
to turn around as soon as the acquired units start generating
material revenues.
Currently, Dell has a Zacks #5 Rank (short-term Strong Sell
rating), reflecting its lackluster fourth quarter view, falling
share prices and a weak PC market. But we would like to turn
investor attention toward another server vendor, Cisco
Systems Inc. (CSCO), which has a Zacks #2 Rank (short-term
“Buy” rating), reflecting its first quarter 2013 earnings beat.
ALCATEL ADS (ALU): Free Stock Analysis Report
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DELL INC (DELL): Free Stock Analysis Report
ERICSSON LM ADR (ERIC): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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